Jon Eckhardt

Outline Provide a brief overview of some of the different types of co-working spaces Discuss some trends that may be influencing how workspaces for entrepreneurs are changing in Madison Turn the conversation over to our expert panel to further explore how you can best utilize the different types of workspaces

What are co-working spaces? Co-working spaces are common work environments for individuals who share similar values or interests, but who are often not employed by the same organization.

Types of co-working spaces Incubators Community work spaces Business accelerators

Explaining the current landscape Information technology Venture finance

Act 1: Changes in Information Technology

Kristen BermanWes Schroll

Due to changes in information technology…what a firm is appears to be changing in some industries.

Implications of the “Cambrian Moment” Why people decide to work together in workspaces may be changing. 1990s: Individuals work together in a space organized around the common goals of the firm 2014: Individuals work together in workspaces for a sense of community, to facilitate meetings and networking, etc.

Act 2: Changes in Venture Finance

Discovery Proof-of Concept Product Design Product Development Manufacturing/ Delivery Financing IdeaPre-seed Funding Seed Funding Expansion Operating Cap. Friends and FamilyAngelsSeed FundsVenture FundsFounderInstitutional Equity Loans / Bonds Product Dev Angel Groups Start-up Funding Funding Landscape *Source: Sue Preston and the Angel Capital Association, with modifications by Eckhardt.

Venture Capital Financing (circa 1946) Venture capital firms operate investment funds that specialize in providing financing for startup companies Willing to finance firms that are much riskier than more traditional sources of capital Willing to finance firms that require much more capital than is available to most entrepreneurs through friends, family, and close associates Require that the firm has the potential to generate large economic wealth Venture capital firms also provide services in additional to capital Expertise Introductions Human Capital Mentoring Monitoring Venture capital firms solve an important problem in the startup landscape

Angel Capital Financing Angel investors are typically thought of as affluent individuals who finance very early stage startup companies Invest in a variety of different ways As individuals As a member of an investment group As a member of an organized angel fund Represent an important financial bridge between conception of an idea and venture capital financing May provide advice and mentoring

Business accelerators (circa 2005) New organizational form Bring venture capital like services to very early stage firms Operate workspaces that are commonly financed and operated by a seed stage investment fund Serve entrepreneurs starting firms that may generate significant economic value but may never require large amounts of investment capital Examples include Y-Combinator, TechStars, & gener8tor Are creating a rapidly evolving national market for seed stage financing and professional advisory services Easy to start, difficult to operate well

Business accelerators (circa 2005) Make investments in cohorts Take applications several times a year Invest in companies at a time Companies typically locate in a co-working space operated by the accelerator for a defined period Characteristics of workspaces often influenced by lean startup approaches to entrepreneurship Combine investment with advisory services that typically involve outside experts Typical terms $20,000 investment for 9% of the start-up company Aspire to provide in-kind investment with value several times the cash investment Often provide follow-on financing Focused on the performance of the firms they invest in

Discovery Proof-of Concept Product Design Product Development Manufacturing/ Delivery Financing IdeaPre-seed Funding Seed Funding Expansion Operating Cap. Friends and FamilyAngelsSeed FundsVenture FundsFounderInstitutional Equity Loans / Bonds Product Dev Angel Groups Start-up Funding Funding Landscape *Source: Sue Preston and the Angel Capital Association, with modifications by Eckhardt. Business Accelerators

Community Co-working workspaces Business Incubators Community workspaces

Business Incubators Rent based workspaces that often combine space with additional services Workspaces can be highly specialized Co-working activities are often not the focus of the design Try to capture benefits of members being co-located

Community Workspaces Centers of social and business life much like London Coffeehouses of the 17 th century Represent a space where individuals and organizations with similar interests—in many cases entrepreneurship—can associate and conduct business.

Community Workspaces Often provide organized programming Are often organized as non-profits May be part of a philanthropic or government initiative Like incubators, often charge membership dues or rent, based on services provided or the characteristics of the space provided Try to capture benefits for members from being co-located Modern entrepreneurial co-working spaces may be forming in response to the changes in information technology mentioned earlier.

1871, Merchandise Mart Building, Chicago

What about Biotechnology?

Summary The characteristics of entrepreneurial workspaces are evolving Information technology Venture finance Let’s turn to our panel to further explore how you can best utilize the different types of workspaces