One of the founders of Second Home, the co-working start-up launched by a former aide to David Cameron, is stepping down after a huge cost overrun at its maiden US venue.
Daily Week News has learnt that Sam Aldenton, who set up the business in 2014 with Rohan Silva, is leaving as the company finalises a £9m capital injection from existing shareholders.
Sources close to the situation said the latest investment would be on the basis of a substantial ‘down-round’ for Second Home, meaning that the company’s valuation would be lower than the last time it raised third-party funding.
Mr Aldenton, who had been Second Home’s joint chief executive alongside Mr Silva, is understood to have been responsible for project-managing the company’s new site in Hollywood.
The budget associated with the launch is said to have ballooned, forcing the co-working start-up to seek new funding.
One insider said that the latest injection of capital had been pledged on condition that there would be changes to Second Home’s management and governance.
The shake-up comes at a torrid time for the fast-growing co-working sector, with its biggest player, the US-based WeWork, abandoning a public listing and turning to lenders and its biggest shareholder for billions of dollars to keep it afloat.
Mr Silva, who was a poster-boy for the development of London’s Tech City framework during his stint advising Mr Cameron, the then prime minister, has tended to be the public face of Second Home.
He has drawn in money from shareholders including Martin Lau, the founder of Chinese technology group Tencent, Sir Peter Bazalgette, the ITV chairman, and the venture capital firms Atomico and Index Ventures.
In an interview with the Financial Times last month, Mr Silva said of the cost overruns: “We weren’t in charge of building the building.
“Of course, some of those [extra] costs get passed to us – that’s pretty standard for a tenant.
“But the reason investors are happy to put money in is the occupancy and revenues [from the LA offices] are so far ahead of forecasts.”
Second Home opened its inaugural site in London’s Shoreditch, winning plaudits for its cutting-edge design and has since expanded to cities including Lisbon.
It initially drew in companies such as Zegna, the Italian fashion label, Mercedes, and Cushman & Wakefield, the commercial real estate agent.
In the wider co-working sector, several deals, including Blackstone’s £500m purchase of The Office Group in June, underlined the level of investor interest in flexible office space.
However, the savage writedowns to WeWork’s once-stellar price tag have since undermined investor confidence.