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I've said for a long time that if investors insist on only funding Bay Area companies they should just skip the middleman and cut checks directly to real estate

by api 10y ago

I've said for a long time that if investors insist on only funding Bay Area companies they should just skip the middleman and cut checks directly to real estate owners and speculators.

overcast 10y ago
Seriously, they should just become real estate investors. They get paid in all the funds funneled into startups, and the circle of life is complete.
- jedberg 10y ago
  A lot of them are also real estate investors.
  - r00fus 10y ago
    So is it just the right hand paying the left hand but "funneling" it through a mechanism that's inefficient but may be profitable on it's own?
    - boomzilla 10y ago
      No the idea is that you invest on the real estate with your own money, and invest on start up with LPs' money.
alarge 10y ago
To be a little pedantic here, the numbers quoted here are San Francisco numbers, not "Bay Area" numbers. With just a quick check, I found considerably cheaper commercial lease rates in Mountain View.
- jtbed 10y ago
  You are totally right. It was heavily focused on SF. there are great options outside of SF, but all along the Caltrain stops there is really expensive space because they are more accessible. Castro Street in MV can be very expensive. It matters a lot where the founding team lives and also where you want to recruit from and at what scale. there is a ton of talent in SV as well as East Bay to pull from. Good luck on your startup! thanks so much for your comment.
jtbed 10y ago
I agree, it often seems like money flows from the investor right to the landlord, bypassing the startup. we talked about this in the article. aside from the value of office space and its cost, to your point about the role of the broker, there are very good reasons for brokers to be involved, as it is such a big expense and there are a lot of factors to think about when finding and negotiating a deal that we help with. In my last company, 42Floors, we made (and they continue to make) listings available on a website, and even when founders find a great space themselves, it turned out they still wanted to have a broker on their side to help with the process. In any case, I totally respect your opinion and appreciate you joining the conversation.

by api 10y ago

I've said for a long time that if investors insist on only funding Bay Area companies they should just skip the middleman and cut checks directly to real estate owners and speculators.

overcast 10y ago

Seriously, they should just become real estate investors. They get paid in all the funds funneled into startups, and the circle of life is complete.

jedberg 10y ago
A lot of them are also real estate investors.
- r00fus 10y ago
  So is it just the right hand paying the left hand but "funneling" it through a mechanism that's inefficient but may be profitable on it's own?
  - boomzilla 10y ago
    No the idea is that you invest on the real estate with your own money, and invest on start up with LPs' money.

alarge 10y ago

To be a little pedantic here, the numbers quoted here are San Francisco numbers, not "Bay Area" numbers. With just a quick check, I found considerably cheaper commercial lease rates in Mountain View.

jtbed 10y ago
You are totally right. It was heavily focused on SF. there are great options outside of SF, but all along the Caltrain stops there is really expensive space because they are more accessible. Castro Street in MV can be very expensive. It matters a lot where the founding team lives and also where you want to recruit from and at what scale. there is a ton of talent in SV as well as East Bay to pull from. Good luck on your startup! thanks so much for your comment.

jtbed 10y ago

I agree, it often seems like money flows from the investor right to the landlord, bypassing the startup. we talked about this in the article. aside from the value of office space and its cost, to your point about the role of the broker, there are very good reasons for brokers to be involved, as it is such a big expense and there are a lot of factors to think about when finding and negotiating a deal that we help with. In my last company, 42Floors, we made (and they continue to make) listings available on a website, and even when founders find a great space themselves, it turned out they still wanted to have a broker on their side to help with the process. In any case, I totally respect your opinion and appreciate you joining the conversation.