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OneEleven announces it is permanently ceasing operations
Betakit | | Apr 22, 2020
Toronto-based incubator OneEleven announced on Wednesday that it has permanently ceased operations due to economic impacts caused by the current COVID-19 pandemic.
In a letter to its community, the incubator noted that because of its model, OneEleven had absorbed some of the risks currently faced by the many startups that it houses in its downtown Toronto location.
“Our membership and partnership fees represent our entire operating budget.”
“That model also involved OneEleven absorbing some of that risk: the risk of failure. The risk of graduations or closures or layoffs among our companies and what that would mean to our bottom line, in relation to the flexible, short-term memberships we provide,” the statement read.
Launched in 2013, OneEleven occupies a 125,000 square foot space in downtown Toronto that houses over 50 startups, including Blue J Legal, Zoom.ai, Hockeystick, and more. Its alumni include Wealthsimple, Borrowell, Tulip Retail, Koho, and Maple, among others. Along with providing office space of varying sizes, OneEleven also offers programming for member and non-member companies.
See: RBC Announces Investment and Partnership with OneEleven to Support Scaleups
“Having worked out of so many spaces in SF and Canada since we have offices in 5 cities, nothing comes even a mile close to OneEleven,” Lloyed Lobo, co-founder of Boast.AI, told BetaKit. Boast’s Toronto office is located within OneEleven.
With startups and small businesses across Canada affected by the pandemic, OneEleven provided two months of rent abatement to its members for April and May. And, while the incubator moved to offering remote programming, its business model became “existentially threatened.”
“OneEleven does not receive government funding,” the statement reads. “Our membership and partnership fees represent our entire operating budget, and we have always done great things with slim margins. As the particulars of a post-COVID world remain uncertain to all of us, there is also no doubt that a safe return to office environments will require changes to the way we work, and in particular, the required de-densification of physical space will fundamentally threaten our business model.”
Roy Pereira, the founder of OneEleven tenant company Zoom.ai, told BetaKit that the incubator had already seen a few of its startup members fail at the end of 2019 and the beginning of 2020. “So when COVID-19 came and made some startups’ business models unreasonable a perfect storm was created,” he said.
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