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Campus 01 October 2020

Struggling startup is not granted rent reduction

LONGREAD - A start-up at VU Amsterdam asked for a rent reduction because of the corona crisis, but that was non-debatable. Instead, the owner received a letter that he must transfer 19,000 euros and leave the office, or legal action will follow.
BY Marieke Kolkman PICTURE Pxhere

A start-up at VU Amsterdam asked for a rent reduction because of the corona crisis, but that was non-debatable. Instead, the owner received a letter that he must transfer 19,000 euros and leave the office, or legal action will follow.

“We sell software that uses scientific publications and knowledge to determine where the growth potential of a scientific company lies,” says Mehdi Farzanehpour, founder of the start-up startup, which he is currently in sensitive negotiations with an investor and which we therefore do not mention by name. “For example, a microscope maker: who needs their equipment and which market niches are there? We have market leaders as clients: Thermo Fisher, Bruker. When the lockdown started, all our US clients had budget freezes. Our revenue of 21 thousand went down to 15 thousand overnight, so to speak.”

Right before that Farzanehpour and his colleagues were starting a new round of investment, in search of new investors and increased sales. “Last year, we contracted more than 25 companies, including those market leaders. We were in the process of doubling the team and moving to a bigger room in the W&N building. Two days later the lockdown started.”

Office unused

Farzanehpour, like everyone else at VU Amsterdam, received e-mails that the buildings were closed and that everyone had to work from home, and that’s what they did. “After a while I contacted the Facility Campus Organization and explained that I had to cut costs, but all the representative said was: When will I get the rent? I am not using the office, I replied, and I’m trying to save my business. Let’s arrange something. But that was not possible. Another time I said that I would clear the office, and then I got the answer that I had six months’ notice.”

He wants to make it clear that he owes a lot to VU Amsterdam. He started his business at the Demonstrator Lab, and received full support of chemistry professor Paola Gori Giorgi, director Davide Iannuzzi and later, when the start-up became a B.V. and transferred to the Amsterdam Venture Studios, the knowledge transfer office IXA of the Amsterdam universities. “And Mirjam van Praag mentioned us in her opening speech this year. We wouldn't be as successful without the help of the VU, ”says Farzanehpour. "But when we were most vulnerable, FCO did this."

'When we were most vulnerable, FCO did this'

It is a deception. Weren't the Amsterdam Venture Studios supposed to be a safe place for scientists to set up their own company? AVS offers workspaces to startups at the VU Amsterdam campus, but this is executed by FCO. And essentially, FCO is not really involved in the startups, the housing service just want to get the rent paid. Farzanehpour: “I renegotiated with every party, like consultants, and they were all understanding: Your earnings are going down, let’s find a solution. Just not FCO.”

Gori Giorgi tweets critically about the case, VU Amsterdam responds: ‘We understand your concerns because VU Amsterdam is very committed to supporting entrepreneurship. In line with that, there's been personal contact with all the startups to check their situation and whether there was a need for a more flexible arrangement due to the coronavirus outbreak.’

Unfair

The spokesperson for VU Amsterdam calls back when we try to contact FCO. “This is about one case, we think it is inappropriate to say anything about it, for privacy reasons,” he says. “In general: we contacted a number of startups at the beginning of Corona and agreed with some of them to postpone the rent. But the rent must be paid. It’s already exceptionally low in the first years, and the VU is not a subsidy desk. We cannot say: You are having a hard time now, just leave some of the rent unpaid. That's not fair to the other startups.”

Inquiries with three other startups that have an office at AVS learn that they have indeed been in contact with FCO, about access to the rooms during the lockdown and about the rent. In some cases a postponement of payment has been agreed.

The spokesman will only mention that they are in conversation with this particular startup too. That sounds quite different from sending them a letter stating that they have to pay thousands of euros or leave, otherwise legal action will follow. “We are in dialogue”, he responds, “they are also being listened to. But if they don't let us know anything and don't pay the rent, we can make demands.”

Worst moment

For Farzanehpour's start-up, the lockdown came at the worst moment for a young company. They were just growing, hiring more people and looking to attract new investors. But investors are not interested in a company that is not growing. Luckily, business is now picking up again and the company is out of danger. The time seems right for that investment round.

“FCO eventually offered to partially postpone the rent,” says Farzanehpour. “But having outstanding payments or debts on my balance sheet is bad for my investment round. My investors will ask why this bill hasn’t been paid.” And then the letter arrived, demanding thousands of euros. “IXA now wants to give us a loan to pay this rent. The only solution is to move to a smaller space and continue paying this rent for one year.”

Or should they look for an office outside the VU? “We are here because of all the support, because of the incubator program for scientific startups, and to be close to scientists such as Paola and Davide. But outside VU Amsterdam it would have been easier to negotiate the rent.”

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