In celebration of Small Business Saturday (Nov. 25), we're profiling emerging enterprises in the communities where we work that have benefited from LISC small business lending and support. This week, we shine the spotlight on Phoenix, where a flourishing co-working space, CO+HOOTS, has spawned a large new space, dozens of small ventures and some 200 new jobs for local talent. All made possible, in part, by LISC loans and expertise.
Jenny Poon was charting unknown territory when she took over a defunct auto shop in downtown Phoenix and turned it into CO+HOOTS, the city’s first co-working space.
Today, thanks to more than $1.3 million in loans from LISC—and plenty of savvy and hard work—CO+HOOTS has expanded into a larger space and the business has grown to encompass 250 member companies, who are flourishing in the collaborative environment where workspaces are both affordable and convenient to the city’s light rail system.
Those members—including web developers, designers, attorneys and start-ups—have in turn launched dozens of small enterprises and created some 200 jobs since moving into CO+HOOTS. Peer-to-peer mentoring and networking help the businesses thrive, and CO+HOOTS now hosts more than 300 events a year that support professional development and community building to further encourage growth. Many members have gone on to set up shop in their own brick-and-mortar spaces.
But it nearly didn’t turn out that way. In 2016, Poon was poised to purchase a 14,000-square-foot former office building for the CO+HOOTS expansion, with support from the SBA, LISC and others. But at the 11th hour, the SBA loan fell through. Because of LISC’s nimble lending abilities, Poon was able to get financing that other investors couldn’t offer.
“We had been working with a lot of different banks,” recalls Poon. “It’s generally a frustrating process, but we were fortunate that LISC was there. In the end, they decided to fund the whole thing.”
Patrick McNamara, a LISC senior program officer in Phoenix, explains that CO+HOOTS was a tough candidate for traditional small business lenders for a range of reasons, including the short time it had been in businesses (fewer than three years) and because the co-working business model wasn’t well-understood at the time—even though Poon’s company had already outgrown two spaces and showed profit. But to make things even more complex, most of Poon’s income from CO+HOOTS went directly into the CO+HOOTS Foundation, a nonprofit that supports women and minority entrepreneurs—which made her balance sheet look weak to most lenders, said McNamara.
But from LISC’s perspective, investing in CO+HOOTS promised a high rate of return—especially in terms of social capital and economic development in the surrounding community. “It was at a time when the usual large employers had reestablished their profit margins without hiring back people who were laid off in the credit crisis,” said McNamara. “We did the deal since it created jobs and new businesses in an area easily accessible to light rail transit.”
LISC’s acquisition and construction loans came to the rescue just when it looked like CO+HOOTS might not be able to buy the building that would enable the business to grow. McNamara and Poon still meet periodically to discuss the venture. “We’re excited to see how she grows her business.”
While CO+HOOTS was the only co-working space in downtown Phoenix when it debuted, today, there are 10. This kind of expansion is another key goal of LISC’s investment model—to lay the groundwork for other employers and investors to drive gains in local communities.
Poon, a Minnesota native whose parents immigrated from Viet Nam, first conceived of CO+HOOTS while running a graphic design business from home, “siloed, and incredibly lonely,” she recalled. “I wondered if we could build a community where people felt more connected, in an environment that would be financially low-risk for a new entrepreneur.”
The worktables that roll on skateboard wheels and the mid-week “mind tweaks,” where co-workers strategize and share skills, bring together people who might otherwise have no professional connection. “There was nothing else in Phoenix that supports scaling small businesses,” Poon said.
Today, Poon balances running CO+HOOTS with raising her 3½-year-old daughter, and managing a boutique design and advertising agency she founded. Demand for co-working space at CO+HOOTS is now so high that she is planning to expand to two more facilities in the Phoenix metro area over the next few years. Last year, Poon was the first minority entrepreneur and the first woman to be named Businessperson of the Year by The Phoenix Business Journal.
Poon is even envisioning taking the business to other cities across the country. “We are looking for places that are interested in supporting stronger entrepreneurial and business communities,” she said. “We have these opportunities to expand and we’re incredibly grateful.” For Poon and CO+HOOTS, this is clearly just the beginning.
For more information on LISC Small Business, visit liscsmallbusiness.org.