A community-led offer to buy back Montréal startup hub Notman House was not accepted by the Business Development Bank of Canada (BDC) and Investissement Quebec (IQ), BetaKit has learned.
The proposal, spearheaded by real-estate startup Guiker, was outbid by another party, according to Guiker CEO and founder Nan Hao and Mission.dev co-founder Gabriel Sundaram. The identity of the party, the value of the potential transaction, and their plans for the historic building are not yet known.
“What we know today is Notman House is still open, startups are still renting space, and events are still happening.”
Notman House, a heritage building that acts as a co-working and conference space for Montréal startups, was placed on the market at an asking price of $5,495,000 CAD, under a court-supervised sale in the fall.
Its owner, the OSMO Foundation, defaulted on its debts to the BDC and IQ, which had initially provided grants to finance the hub’s operations when it opened in 2013.
Guiker and a group of community investors from the Montréal startup scene, including Sundaram and Nectarios Economakis, partner at Amiral Ventures, presented an offer to buy back the heritage building through a fractional ownership model on March 25. The fractional real estate model would have allowed investors to buy smaller shares of real estate assets and function as limited partners. On April 5, they were informed that the government bodies had accepted another party’s offer.
“We are disappointed. Notman House was always an ambitious project and as we saw with all the comments and posts over the last few weeks one that had an immense impact on the startup community,” Sundaram, who helped spearhead the community-led offer, wrote in an email to BetaKit.
Hao told BetaKit that the bidding process was conducted “fair and square” and that the community-led offer was not the highest received by BDC and IQ.
“The community initiative wasn’t the thing that got rejected,” he said in an interview with BetaKit. “At the end of the day, [BDC and IQ] followed the court procedure, they followed a rightful procedure as a lender.”
Hao said that Guiker informed community members who had pledged to invest about the decision soon after the bid was rejected.
“Selling it back to the community is probably the best thing for entrepreneurship and for it to be for the mission that BDC and IQ are promoting. But that does not change the fact that I do not feel entitled to win,” Hao said. “BDC and IQ did not do anything wrong, and I certainly don’t want the community to feel that.”
Sundaram confirmed that BDC and IQ did not reject the community proposal itself, but rather followed internal protocol and accepted the offer from the highest bidder. Guiker was simply outbid.
RELATED: Notman House is for sale. A startup-led effort wants to buy it back
“Of course being optimists, we hope there is a chance that any future owner may be interested in renting the property or part of the property to the OSMO Foundation to continue with its mission,” Sundaram wrote.
“It may be weeks or even months before we know what the next phase will be for sure. What we know today is Notman House is still open, startups are still renting space, and events are still happening.”
Hao doesn’t think the story ends here for Notman House, especially after seeing widespread support for Guiker’s buy-back proposal from the local startup ecosystem.
“We are surprised by the overwhelming support from the community,” he said. “51 Sherbrooke is just an address. The community itself is the essence of Notman. And if the initiative is there and the community support is still there, Guiker can always find and support the community ownership of Notman 2.0.”
Paule Savard, the managing director of Notman House, wrote in an email to BetaKit that the sale process is ongoing, but that “it was amazing to note the true commitment of the startup community towards Notman House. It means a lot and shows how Notman has been significant for the ecosystem since it exists.”
BDC and IQ declined to comment for this piece.
