The Clubhouse Case Study – Making the case for roll out financing

In July 2017, BOOST&Co provided The Clubhouse – London’s leading business club, lounge and meeting place – with a growth capital loan totalling £3.5 million. This investment was used to implement The Clubhouse’s roll-out growth strategy, which entailed the opening of two new sites in the City of London. This follows the company’s first two sites in St. James’s Square and Mayfair.

Welcome to The Clubhouse

The Clubhouse was founded in 2012 by CEO Adam Blaskey, having spent many years meeting his property development business’ clients in various uninspiring and unproductive locations in and around London. Like many business owners within the city at the time, Adam became frustrated with the lack of venues that met his business needs. From this frustration, the idea for The Clubhouse was born.

The Clubhouse is now an award-winning business, and the culmination of Adam’s desire to fill the gap between serviced offices and co-working spaces on the one hand, and meeting in hotel lobbies or coffee shops on the other. Today, The Clubhouse offers business clubs, business lounges, and meeting spaces in three London locations: St. James’s Square, Mayfair, and Bank.

Funding expansion and growth

In its early days of operation, The Clubhouse accessed several funding options, such as senior debt, asset finance, equity investment, crowdfunding and, shareholder loans. This allowed The Clubhouse to open its first two sites, streamline operations, grow its staff complement, and successfully prove its business model. After five years of operation, and considering the growth of the London shared office space market, the company identified significant growth opportunities. After 12 months spent refining the business model, The Clubhouse was able to develop a detailed and realistic growth strategy that would enable the business to open two new sites as a stepping stone to opening a global network. However, the cost of expansion necessitated additional funding to empower the company to scale. As an asset-light business with no desire to sacrifice equity, further growth therefore required a new type of financing solution.

“We knew that we needed to raise a decent amount of money – somewhere in the region of £3.5 million. Venture debt was a pretty attractive solution, because it could provide the funding we needed without diluting equity,” says Adam of his decision to access growth capital.

Finding a partner in BOOST&Co

Following a rigorous fundraising round, in which The Clubhouse’s management team spoke to a range of investors and received a number of offers, The Clubhouse reached the decision to partner with BOOST&Co. Following an initial meeting in February 2017, The Clubhouse received a term sheet from BOOST&Co in early March. This followed a process of meeting with Joanna Scott, principal at BOOST&Co, and sharing the management team’s vision for growth.

“Throughout the funding process, Joanna was really supportive. Our business model isn’t complicated, but it does have lots of moving parts, so you need to look at it holistically. We felt like she really understood our concept and ambitions right from day one. She got behind us, and was proactive and supportive from the outset,” Adam comments.

“It was immediately clear to me that The Clubhouse occupies a unique position within a growing market, with a proven business model. We were excited at the opportunity to learn more about the market and work with an ambitious and driven team,” says Joanna.

Roll out finance and the funding process

BOOST&Co provided The Clubhouse with £3.5 million in roll-out financing, to allow the business to fund its growth without the loss of equity or use of covenants. This followed a stringent due diligence process.

“Due diligence can be a time intensive process for management teams seeking funding, but working with the right partner helps. It is important to find an investor that understands the market in which you operate, recognises the successes to date, and the challenges specific to the roll-out. Luckily, the BOOST&Co team has extensive experience in this area, so we were able to share our knowledge and expertise with The Clubhouse,” comments Joanna.

The Clubhouse also worked with a corporate finance advisor to alleviate some of the due diligence burden. Adam added: “BOOST&Co’s approach was very quick and streamlined but working with a corporate finance advisor really smoothed the process.”

Flexibility to roll with the challenges

Launching a new site can be an unpredictable process, particularly when one factors in the need to work with numerous partners and suppliers. This unpredictability is inherent to the roll-out process and needs to be factored in to both project management and investment planning. When unforeseen challenges arise, investors may need to display flexibility.

Once the actual costs and timeline were finalised, and in light of some delays in completing the lease and starting works on a new site, it became clear that it would be necessary to modify the way that BOOST&CO structured The Clubhouse’s funding. While this did not involve any changes to the investment amount or the headline terms, BOOST&Co was able to restructure the timing of the funding, to assist The Clubhouse in meeting its growth objectives.

“As we see with many new capex projects, delays are often unavoidable and this requires understanding and support. We were glad to be able to show some flexibility in how we delivered their funding, and to support them through the process of launching the first of the two new sites. The Clubhouse, Bank is now open, and working with management to ensure the quality of the new site has been well worth it” says Joanna.

Speaking about BOOST&Co’s flexibility, Adam adds: “Lots of funders base every decision on a spreadsheet, and whilst this is a great statement of intent, things don’t always go to plan. It was great to work with an investor that understood our journey, and was prepared to be flexible and take an entrepreneurial approach.”

Looking beyond today – The importance of relationships and partnership

Every new investment begins a new relationship of between three and five years. Because of this, and starting at the initial meeting, it is critical for funders and the company they are investing in to form a good understanding, and work from the same playbook. Without this synergy, it is extremely difficult to develop a strong and mutually beneficial relationship.

“When investing in a company, BOOST&Co is serious about choosing management teams that we like and feel confident we can work with. Factoring relationships and partnership into our investment decisions allows us to offer more than just money – we can also provide the benefit of our experience and expertise, says Joanna.

“Throughout the funding process, we have been pleased with the supportive and flexible approach from BOOST&Co. We’ve all been on the same page and that is exactly what you want from your funder – to be funding partners” concludes Adam.

The Clubhouse secures £3.5M Growth Capital from BOOST&Co

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