Interesting. Anybody know more about this? In particular, the future of the Pgh TS space and/or equipment?
(New to this group. If these items are known, just point me in the right direction.)
Per recent email from Dan Woods:
TechShop, Inc. has reached an agreement with a third party to acquire all company assets. The new entity, TechShop 2.0, LLC, plans to re-open as many stores as possible, as soon as possible. The acquiring partnership is led by Dan Rasure and Bill Lloyd (Owner of BHL Services Inc. of Minneapolis).
On November 17th, just hours before we had planned to file Chapter-7, Mr. Rasure approached with an interest in acquiring the entire company. Being struck by his sincerity, business acumen, and resolve to re-open shops quickly, TechShop, Inc’s Board and a small team of former employees embarked on a non-stop eleven-day effort. The end result, an arrangement with Mr. Rasure and Lloyd to re-open the next iteration of TechShop.
Throughout this effort our goal was to restore service to communities and members, rehire as many employees as possible, and provide a more sustainable path forward for TechShop’s members.
None of TechShop’s Directors and Officers have or will receive so much as a dollar from this deal – either through equity, cash payments, or compensation.
TechShop 2.0’s shop re-opening schedule and member re-engagement plan are currently being finalized. This information will be released in the coming days. TechShop 2.0 will work with members at each location for the purpose of assisting anyone who may need to remove personal materials from one of our locations.
For those who submitted email to firstname.lastname@example.org we will be accessing the account and responding to all of you as promptly as possible. For now, I invite you to visit TechShop.com and stay tuned to @techshop for further developments and reopening details.
So, I dunno?
Thanks for the info. Very helpful.
I had heard, apparently incorrectly, that Protohaven was acquiring some of the tools from TS.
So, if I understand correctly, Protohaven does not currently have any Tools for the Trenton Avenue space?
Related, what funding balance does PH have? Somehow, a lease was signed for the Trenton Avenue space so funds must have come from somewhere?
I think all the members got that mail. TechShop website is still in “out of business” mode and slow to load.
I haven’t received any emails from TS. I’ve picked up all my info second hand, mostly on the TechShop Orphans Facebook page.
Word going around the Facebook groups related to TS is that Pittsburgh will have to be “re-evaluated” or some such language like that. The new potential owner said that a move would definitely have to be involved if it were to relaunch.
My gut feeling is that with the creation of PH and expansion of HackPGH, they’ll dump Pittsburgh since it was a major cash burn anyway.
So originally Protohaven had intended to purchase the bulk of its initial machinery from TechShop Pittsburgh when it closed its doors, but the bankruptcy threw a wrench into those plans since the posession of that machinery got transferred to the arbitrator of the bankruptcy and is not currently available for sale (acquired by TechShop 2.0, and we don’t know what their intentions are).
Here’s the relevant information that Protohaven sent out in an email on Black Friday:
“As shared in our last meeting, the plan is to set up in the front 3000 sf of the space (as shown in the image above), expanding into the whole 12500 sf building in January. We would start by leasing lasers and some other low-risk equipment from members, and build out the rest of the shop as support grows and we can implement appropriate safety measures.”
The image showed computers/lasers/electronics in the 3000 square ft space, and woodshop/welding/machine shop in the other half.
I gather that the equipment was never available, as it was either owned by AutoDesk, or to secure their investment. Since there was no bankruptcy filing, we still don’t know the actual ownership or financial condition of TS. I asked several times for an inventory, but was never able to get ANY information on the assets or costs of TS Pgh. This situation reeks of bankruptcy abuse or fraud.
Disclaimer: I worked at a lot of dot coms in the 90s and saw some really immoral, if not illegal, acts related to who owns what when. I was usually a contractor with no dog in the fight as long as they paid my invoices on time; but I was at a few startups with < 25 people where really, really, rotten things happened.
Only a few days before they announce bankruptcy someone came along and asked to buy the outfit but that wasn’t announced until shortly after they filed Chapter 11? Inconceivable!
One other thing about bankruptcy. The Court can rescind payments and asset transfers in the months before the filing, I believe 90 days. You’ll notice the reference in the liquidation notice that TS and the new guy will revisit the matter in March. If the deal goes thru by Dec. 21, then TS files at the end of March, the new guy will have to deal with the trustee, but it’s too late to rescind the deal… the TS millionaires walk away paying nothing to the shareholders, unsecured investors, or members, having dumped any assets and leaving the new guy with the debt and trying to scrape together ‘transfer fees’ from members that don’t owe him a dime, while he has to rebuild a failed operation. Why am I not impressed with this business plan?
Nice to see some actual paperwork. I had been led to believe that the doors had been shuttered because the bankruptcy had been filed. TS fooled me yet again. laugh
Well this is very interesting. Some relevant excerpts below.
This seems to imply that they are at least considering keeping the Pittsburgh location open, at a different location.
I don’t think there is demand in the Pittsburgh market for two maker spaces. It sounds like TechShop 2.0 is much better funded that Protohaven. Has any effort been made to reach out / work with them, with the end goal of having at least 1 sustainable maker space in Pittsburgh? Maybe it could be some kind of commercial / non-profit partnership, with the non-profit running the educational programs, and also ready to step in to run the whole thing on a non-profit basis if it doesn’t prove commercially viable in the long term.
Are there ones that are for sure you’re going to close down, like this one never made money, couldn’t make money, doesn’t make sense to keep around?
Pittsburgh for sure has to move.
Going to the lifetime members, what we’ve currently offered is if you were a lifetime member who just bought a lifetime membership, we’ll honor that with a $400 transfer fee. If you’re a lifetime membership who bought it as part of a loan or investment package, it’s $275 plus you get to convert whatever you invested at a rate of $0.20 on the dollar to machine use credits. Currently there’s machine use credits on, say, the water jet. But we’re evaluating every machine that has significant overhead costs and maintenance costs, making sure that members who use machines that have the high overhead aren’t being subsidized by somebody who just uses the sewing room, as an example.
TECHSHOP INVESTOR/LENDER FAQ ON STRATEGIC PIVOT
June 2, 2017
QUESTIONS ABOUT ANY IMPACT ON VIP LIFETIME MEMBERSHIPS
Q. How will the possible sale of existing TechShop locations impact my VIP
A. The standard TechShop License will include reciprocal privilege obligations
and rights. The licensee’s members will be able to access other TechShops,
whether TechShop owned of TechShop licensed, and the licensee will be obligated
to honor members from other TechShop network locations.
Q. What about new locations that open up that are operated by licensees? Will I
be able to use my membership there?
A. Your VIP Membership will always be good at all corporate-owned locations,
and at all licensee locations that choose to honor active TechShop memberships
including VIP Lifetime Memberships.
QUESTIONS ABOUT HOW THIS IMPACTS INVESTMENTS OR LOANS
Q. I already agreed to a loan modification. Are you asking me to do another?
A. We are asking local workshop investor committees to propose ideas for
converting existing loan holders to equity and/or restructuring loans. We will be in
communication with remaining lenders about converting their loans to equity once
we have the recommendations from the committees.
Q. I have my loan with an individual TechShop LLC store location entity, not with
the TechShop, Inc. corporate entity. Will my note be combined or moved to
TechShop, Inc. corporate, or stay with the individual location?
A. For the time being, the notes will stay with each individual LLC. However,
we may consider converting these notes to TechShop, Inc. notes (or preferably
equity), depending on recommendations from the investor committees.
Q. If I convert my existing note to equity, how do I get liquidity?
A. Liquidity for all TechShop equity holders would occur upon a liquidity event,
such as if TechShop were to be acquired, or TechShop becomes publicly traded
through a Regulation A+ offering, or a full IPO.
Q. Are we still considering becoming publicly traded?
A. Yes. But before we explore that possibility, we need to stay focused on
stabilizing our operations, becoming EBITDA positive as a company, and
increasing our North American licensing presence. We remain very interested in
exploring a public offering through Regulation A+ or a full IPO in the future.
Q. Am I going to be forced to convert to equity?
A. Our hope is that we will not have to ‘force’ anyone to convert their notes to
equity. We are strongly encouraging our lenders to voluntarily convert their notes
to equity to pit the company in the healthiest financial state possible in order to
grow the company, execute our pivot plans, and become profitable for our
Q. Will the loans stay with TechShop or move to the new potential owners?
A. It depends on the structure of each possible asset sale. However, it is likely
that the loans would stay with the TechShop entity that owns the loan.
Q. What is the proposed timeline for restructuring loans again?
A. We are putting together committees at the individual workshop location after
nominations are submitted next week (the week of 6/5/2017). We will then be
asking the individual committees to convene in mid-June so they can share their
recommendations by late June. We anticipate that we will have a plan that these
committees have endorsed ready to present in time for the July 22 2017 investor
and lender meeting to be held at TechShop San Jose.
Q. What is your position on lender arbitration?
A. We are hopeful that all of our lenders will work with us to right size our
balance sheet, both for the TechShop community and their own interests. In the
event current lenders decide to exercise legal remedies, we may end up in a
situation where we cannot reorganize without court intervention. We don’t feel that
would be beneficial for TechShop, or for our investors and lenders.
QUESTIONS ABOUT TECHSHOP’S CURRENT FINANCIAL SITUATION
Q. What is the status of outstanding past due loans?
A. The fact is that we are past due on most of our payables, including investor
loan payments. Many of the lender notes have been restructured to defer
payments past due.
Q. How does this pivot impact the past due loan payments (will the note payments
be brought current)?
A. We currently do not have the liquidity to bring the payables
current. However, we are looking to structure a capital raise to do just this, but we
will need help from our current investors and lenders in restructuring our balance
sheet in order to allow this to occur.
Q. When does TechShop run out of cash?
A. We are already past due on payables right now, and we are working with
all our lenders. We are focusing our efforts to turn our situation from a negative
cash flow situation to a positive cash flow situation.
Q. What was the thought process for the opening 24 hours a day, 7 days a week?
A. Generally speaking, we thought that opening our locations 24x7 would be
a way that we could be more responsive to the needs of our members. Every
night, we have to ask members to go home at closing time, and we thought being
open all the time would attract more members. It ultimately did not show the
membership increase we had hoped, and the decision was reversed in Q1 2016.
Q. What is the strategy for raising more funds?
A. The first step is for us to clean up our balance sheet. We are working with
Autodesk and Lowe’s to convert their convertible notes to equity. We are also
working with our individual lenders to do the same. Then, we are looking to raise
$5 to 8M in new equity in order to take advantage of Autodesk’s generous offer to
sell some of their debt at a discount. Meanwhile, we are continuing our Series B
and EB5 offerings.
Q. Are there any discussions of a sale or a merger?
A. No, we are not currently in any discussions for a sale or a merger.
Q. Are you going to issue audited financial statements for 2016? If so, will there
be a going concern qualification given by your accounting firm?
A. We are not planning to have the 2016 financial statements audited at this
time. The 2014 and 2015 audit report did have a going concern qualification by
the audit firm.
Q. Why is the Autodesk debt so large? Is this related to seat licenses?
A. Autodesk has been a strong partner of TechShop for years, and they have
been essential in helping TechShop grow to the company we are today. This is
unrelated to seat licensees that Autodesk provides to our membership.
Q. When Autodesk converts their note to equity, will that dilute current
shareholders? If so, how much do you anticipate the dilution to be?
A. Details on stock dilution will depend on the deal that is ultimately structured
and whether some of the debt is bought back at a discount.
Q. Can we have store-specific financial numbers?
A. Yes, all store specific financials are available quarterly to our lenders and
QUESTIONS ABOUT TECHSHOP PITTSBURGH
Q. Why did TechShop Pittsburgh fail?
A. We don’t think of Pittsburgh as failing. We see it as a prime example of how
a nonprofit operator would be able to attract additional donation funds to cover the
monthly deficit. In many communities, makerspaces cannot be sustained without
grants and other community dollars. That is why we see the pivot as critical to our
future success. We remain hopeful that we will be able to find an entity that will
assume operation of TechShop Pittsburgh and avoid having to close it.
Q. Is TechShop actively looking for a Pittsburgh solution?
A. Yes, we are in communication with several groups, including the Mayor’s
office, on keeping TechShop open in Pittsburgh. If you are interested in helping in
any way at all, please contact us at PGH_licensee@techshop.com
Q. What is going to happen to Pittsburgh VIP Lifetime Members?
A. We are hopeful any licensee that will take over the location will honor the
VIP lifetime memberships, as well as any memberships that are active and have
remaining time left on them. As additional information becomes available, we will
send it to our impacted members.
TECHSHOP STORE-SPECIFIC QUESTIONS
Q. How are you going to evaluate options for selling TechShop locations?
A. We will look for qualified financial partners who will apply to become a
licensee. We will evaluate options as they are presented to us by market. The
Pittsburgh location is confirmed for closure unless we can find a licensee. We are
also having very early possible licensee discussions for our TechShop
Austin/Round Rock TX location.
Q. What other shops are being considered for closure? What steps are taking place
to make sure no additional shops close?
A. Right now, no additional TechShop locations are being considered for
closure. We are working actively with each landlord on facility cost concessions.
Q. What efforts are being made to work with local universities, trade organizations/
A. Individual efforts vary per market. However, we believe that we will be in a
better position to work with various community groups once this strategic pivot has
occurred (especially if the licensee is a nonprofit organization).
Q. How can I suggest local specific marketing?
A. Please speak with the general manager at your local TechShop location.
Q. How can you better cultivate the community of makers that use the shops?
A. We’d love your suggestions! Please send your ideas directly to the general
manager of your local TechShop location.
Q. Will you continue to have company stores or just licensee stores moving
A. Our plan is to keep all existing company-owned TechShop locations as they
are for the foreseeable future, and open TechShop Brooklyn as our last companyowned
location. We plan to open all new locations after TechShop Brooklyn as
Q. What is the recourse for members with active memberships if their local
TechShop location closes?
A. Of course, we are working very hard to ensure no local TechShop stores
close. However, if that were to occur, we would work through a refund process on
an individual store basis.
Q. I am an investor for the TechShop Los Angeles store that never opened. How
does this impact me?
A. We will be asking our investors at the LA location to also put together an
investor committee. We will ask that committee to help us locate potential
licensees in the area in addition to helping with all of the other tasks we are asking
of the investor committees.
QUESTIONS ABOUT TECHSHOP’S COMMUNICATION WITH INVESTORS AND
Q. Why did you wait to communicate with your investors and lenders?
A. We have had several multi-million dollars international licensing deals in the
works that we believed would have materialized by now. We are committed to
providing very timely and regular communication with all our investors and lenders
starting immediately, including quarterly newsletters.
Q. What is the value of my TechShop stock?
A. We will have additional information at the annual investor meeting on July
22, 2017 at TechShop San Jose.
Q. How are you going to ensure that there is investor transparency in the future?
A. In addition to implementing quarterly newsletters and opening up the
shareholder meetings to all investors and lenders (not just shareholders), we are
recommitting to addressing all investor and lender questions and concerns within
Q. Are TechShop investor webinar meetings recorded?
A. FAQs as well as the presentation will be available for all investors and
lenders, including those people who were not able to attend the webinar.
Q. What benefits does TechShop bring to local makerspaces that would make
them want to license and/or have managed services?
A. We believe we offer a great number of benefits to prospective licensees,
including an stablished brand; a CRM that tracks members, privileges, and
machine authorization across the network of TechShop locations; standardized
curriculum for over one hundred classes; and the ability to offer your members
privileges at other TechShop locations; access to TechShop’s team of planners,
designers, recruiters/trainers, etc…
Q. Can you send us a licensing contract that we use for international locations?
A. The licensing contracts vary by location. We are working on a set of
standard licensing terms for our North American locations, which should be
available later this month. TechShop’s existing license agreements have
confidentiality clauses, so we are not able to share those.
Q. Why are you focused on international licensing instead of raising funds to keep
local TechShop stores open?
A. International locations are owned and operated by our overseas
partners. TechShop receives licensing royalties and managed services revenue
that significantly helps to support our US operations.
Q. How can we get information about bringing TechShop licensing to smaller
communities (>100,000 people)?
A. Please contact email@example.com and we will provide information
on licensing to you directly.
Q. Will licensees be able to set their own pricing to attract more members?
A. Depending on the licensing tier, we anticipated licensees will have some
discretion in membership fees by location.
Q. Will these licensed locations be branded as TechShops?
A. Very likely. We would also entertain managed services for non-TechShop
Can you post the actual PDF it requires a Facebook login but is not hosted at facebook.com.
Also, even if you enter a Facebook login the PDF still doesn’t come up.
I asked Dan Rasure on the Facebook TechShop 2.0 page what if any plans TS 2.0 had for re-opening a Pittsburgh store. His response was non-committal – it would require some analysis, which is fine. He said not in Bakery Square (which I think is painfully obvious).
At a cost starting at $100/mo, $50/mo for a small locker, and no free parking, maybe not.
Assemble seems to be doing ok, Hack PGH is expanding, and CMU is dropping $25mil on a maker space that will be open to all students and employees.
It looks like TS 2.0 bites the dust. The website is down and TS 1 pulls out of the agreement, citing their inability to contact TS 2’s board members and no financial information.