We have been working on the Harehills Project for nearly 14 months now. It started with a bid for a substantial amount of ERDF monies (£2.1M) and a BHAG: Incubate start-up or struggling social and private enterprises in the same location, scale them, and encourage cross pollination of ideas. We didn’t’ set out to be different or unique. (Any readers out there who can point me to a similar project, I would be grateful. We have not found one yet.)
The idea rests firmly on the view that business is business. (Early posts about Jim Collins explain this further). It all boils down to execution and discipline. The private sector does not have this completely figured out. Hence, over 1,000 business books on this topic alone!
The exciting part is not the incubation, it’s not the social enterprise bit, it’s the following –
1. cross pollination of businesses
2. scaling of the enterprises-including non-recycling social enterprises
3. raising the bar in the 3rd sector
4. and helping to start regeneration one of the most deprived neighbourhoods in the UK at that same time.
14 months on we have realised the ERDF portion will only be £350,000, if any. (State Aid Rules, not that they exist—but they take 18+ months to fight in Brussels!) We have learned quite a bit about property development, investors in the UK, and the tiresome work needed when your project is too expensive (£6M) for the plethora of smaller grant and investment entities and too small for the smaller numbers of larger development schemes. We have also confirmed that no matter how exciting the idea (to yourself), you must be able to make sense of it in boring bankers’ terms, otherwise you will be forever looking for that elusive passionate bank and investor. This means, scale it back to boring, then pitch the exciting stuff as icing. A stark difference to investment projects in the US.
I will talk more about the project over the coming weeks as we drive towards completion of the financing stage in January.
UPDATE | But, where are we now?
We have a business plan.
We have a keen investor (£500,000) and at least one more in the wings with the potential to add a similar amount.
We have evaluated the project from a builder’s viewpoint, substantially lowering the cost to complete (£3M)
We have exclusive rights to the building and are currently in negotiations on the long leasehold with the Council. We expect this to complete by January.
We have at least 3 banks interested. The likely bank will probably be determined early December. (Yes, we must finance part of this project. Grants as the entire answer is the wrong direction)
We have a handful of tenants beginning to line up without any work thus far in this regard. We will pick the pace in the next 45 days to secure letters of intent.
We know more about the building than anyone in its 100+ year history. (RIBA Stage D plans, QS estimates, et. al).
To crack this nut we need to finalize the finance and investment in the next 100 days. During this time we will shed some light on the community and regeneration aspect of this project (not forgetting the politics) and its place in the world of CICs. I will also talk about what it feels like to be investing one’s own money in a project that will ultimately be owned by the community. Will we or won’t we succeed, we will keep you in the loop.
More to follow in the coming weeks….
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