Let us begin with the simple truth – cost matters, it always does. Its importance, however, it is much less than usually attributed to it!
Suppose you work in the field of Cyber or FinTech. Renting an office in Rothschild Boulevard will cost you NIS 8,000 a month (a small office J), while an office, twice the size, in Petach-Tikva will cost you NIS 4,000 a month. It seems you can save NIS 48,000 per year. Amazing! Well, not really…
During the year, you had to recruit 4 excellent employees in PT-Hacking, Defense, Malware and Forensic researcher (I really have no clue what thees titles mean). To recruit employees in Tel-Aviv took you about a month. In Petach-Tikva, however, it took you 9 months. That means the company lost 9 months! Is it worth NIS 48,000? Maybe, but you should be aware and understand the consequences.
However, if you are a company located in the center of Israel, which can apply to the start-up class, offered by the Israel Innovation Authority, and may be eligible to receive a grant of 50% of your annual budget (say NIS 2 million), it could be worth to consider renting an office space one hour driving from the center (say Sderot), you could receive a grant of 75% of the budget (approximately NIS 3 million!) Is it worth the travel? Maybe…
If you are planning to rent an office, stop for a second, define your current “profile” and how you plan to develop in the next two years. This profile will help you understand better the company’s needs according to objective parameters and will help you weigh more accurately each of these parameters.
Formulate you Profile:
- What is your field of work – AgriTech? FoodTech? Industry 4.0? CleanTech? Cyber?
- Where is the industry located? Focus on prospective clients
- Is the company eligible to receive benefits and grants from the government? From local authorities?
- In what stage is the company currently at – Pre-Seed? Seed? Early Stage? Growth?
- How many employees do you currently have and how many do you expect to recruit in the near future?
- What is the “type” of employees you wish to recruit in the near future?
Definition of needs:
- The size of the office, growth flexibility
- Do you need a Conference Room? How much will you use it?
- Can some of the employees work together in an open space?
- Is the interface with other companies important? With other people?
- Is the office easily reached? Traffic? Train? Parking?
- What are the surrounding conditions and how much your employees care about the availability of near gyms, restaurants?
- Can you rent for a short period? What are the required guarantees?
Two additional parameters to consider:
- How important it is to the “renter” that his clients will succeed – can he be flexible when needed (with startups you always have to be…)
- What is the ecosystem the renter can offer – leads to investors? Help in recruiting staff? Labs? Benefits from service providers?
The (unobjective) author is Elad Yeori, the Co-founder and CEO of SouthUp – a non-profit organization aimed at promoting growth in Israel’s periphery in general in the Gaza Envelope area in particular, create jobs in the various innovation fields and make the worlds of entrepreneurship, innovation and technology accessible to youth.
The organization manages two office spaces for start-up companies and entrepreneurs (Sha’ar Hanegev and Kibbutz Nir-Am) and is currently in the process of establishing its third space.
Contact Him At Elad@southup.org