Why 1776 is closing its original incubator location, and thoughts on its future in DC

The original location of 1776 is closing at the end of the year.

1776 plans to leave its current D.C. location at 1133 15th St. NW after the prominent incubator network couldn’t reach an agreement over lease renewal terms with the building’s owner, DivcoWest. The lease will expire on December 31.

For now, 1776 DC members will have the option to migrate to its Crystal City, Va., campus, offering three free months of membership. It comes amid talks of Amazon HQ2 potentially landing in the Arlington community, Technical.ly DC previously reported. Leaders of the incubator plan to keep a presence in D.C., and will look to secure a new location in 2019.

The news was first reported by the Washington Business Journal.

This news comes a little over a year after a merger deal between 1776 and Benjamin’s Desk became final. In that deal, the 1776 name was retained and Benjamin’s Desk cofounders Jennifer Maher and Anthony Maher assumed day-to-day management of the incubator network. Programming for members and the tech community has continued at the space

In a statement released today, 1776 CEO Jennifer Maher explained that during the merger, 1776 shifted business models from “assuming lease liabilities to a managed service model,” that allows the incubator to expand and better manage its markets. With this shift in business model, 1776’s real estate strategy relies on partnerships with property owners to manage its spaces.

In October 2017, real estate operating company Divco West bought the 15th Street building for $101 million, as reported in Bisnow.  When 1776 was in discussion nearing the end of its lease, both parties could not agree on a new leasing term.

“Unfortunately, we were unable to come to an agreement under our new management model. While we are sad to leave our original campus location, we remain deeply committed to the District and are actively pursuing other locations,” Maher said in a statement. “We look forward to finding another campus quickly in downtown D.C. to continue serving the entrepreneurial community and continue to further build upon our dynamic ecosystem. In the meantime, we will continue our operations in the Greater Washington region from our Crystal City campus.”

Technical.ly reached out for a comment from Divco West but has not received a reply as of yet.

1776 Chief Strategy Officer Penny Lee joined the incubator first as an investor with original 1776 founders Donna Harris and Evan Burfield, and served on the advisory board when 1776 was just a concept, so she’s seen the company grow in many ways.

“It’s bittersweet, most definitely, but at the same time, it’s the right decision for the company and for the growth. It was just unfortunate that we couldn’t come to an agreement with the landlord that made economic sense,” Lee told Technical.ly. “We still remain deeply committed to the District and look forward to coming back as soon as possible.”

Lee said the company is encouraging its members to migrate to 1776 Crystal City and she said the team will be working with individual startups to find the best fit for them during this transition.

“As bittersweet as it is to end a lease term naturally at one campus, especially the original 1776 campus, it allows us to engage with several other stakeholders and landlords in D.C., that will ultimately allow us to serve even more companies and entrepreneurs,” said 1776 Chief Growth Officer and Head of Incubation Anthony Maher.

Lee said 1776 hopes to make an announcement about a D.C. campus early in 2019. The incubator is exploring neighborhoods in the general area surrounding the 15th Street location, and other areas in the District that could potentially offer a new partnership with creative spaces and opportunity zones like Wards 7 and 8.

“Hopefully we won’t be physically away from the city for very long and are able to come back and have another campus very quickly, and that’s why we want to explore maybe partnering with other groups and organizations to still be able to have an impact, deliver programming, conduct mentor office hours and still have an engagement here in the community even though we might physically not be here,” Lee said.

Lee said current DC Campus Manager Katherine DePalma will retain her role until the DC campus closes, and then transition into a different position, which Lee did not disclose.

Opened in 2013, the original location of 1776 served as a central address of startup activity in the District. President Obama prominently visited in 2014, and it offered a place for the community to gather, becoming an integral hub for #dctech. The incubator has grown to house 45 startups, hosted countless events, and even launched its own startup accelerator this fall where 10 companies are getting resources and working through a three-month intense curriculum concluding next month.

I’ve been working out of the 1776 DC space and have seen that this community is so much farther flung, even in my short three months here. Corporations have innovation centers and young companies have grown larger, with their own sleek offices and latte machines.

So what does this shutdown actually mean for 1776 DC members, the 45 startups housed on campus and the startup and entrepreneurial ecosystem in the District right now? The 1776 community was just notified of the shutdown Thursday evening, right before the news was published by The Washington Business Journal. 1776 DC is a popular hub for events, mentoring hours and some startups have been working out of the space for years.

Dale Nirvani Pfeifer, founder and CEO of Goodworld, said she was surprised when she heard the news about the D.C. campus closing. She’s uncertain what this will mean for her company, which was launched out of the incubator five years ago.

“We founded Goodworld out of 1776’s DC Campus when it opened over five years ago and it has been fundamental to our growth,” Pfeifer told Technical.ly. “I feel grateful for their team’s support and the many important connections that we made there. I wish them the best of luck in finding a new campus so they can continue to support the type of entrepreneurism that makes D.C. one of America’s top tech hubs.”

Pfeifer didn’t share if Goodworld will operate out of the 1776 Crystal City location or if the organization will find a new home.

Mark Parish is the founder and CEO of HelpFirst, another startup that works in 1776 DC. He expressed to Technical.ly that he is optimistic and shined some light on the surprising transition.

“The closing of the DC Campus is unfortunate, but 1776 is more than office space; it’s a tremendous support network and community,” Parish told Technical.ly. “We focused solely on DC for the launch of HelpFirst.com, but have recently begun working to bring products and services from merchants in Bethesda, Arlington, and Alexandria onto the Impact Marketplace as well, so the offer from the 1776 team to provide workspace at the Crystal City Campus while they transition to a new location in the District is greatly appreciated. ”

Along with the incubator that housed startups, 1776 also has ties with coding school General Assembly. The D.C. campus of General Assembly shares the eighth floor of the building with 1776, and it launched through an education partnership with the incubator in 2013.

Paul Gleger, senior regional director at General Assembly, said that the two businesses will continue their real estate partnership until the end of the year. Even though 1776 is leaving the building, General Assembly is staying put for now.

“General Assembly will continue to operate our campus in our current location. As our community grows, we will explore further expansion opportunities in 2019,” Gleger told Technical.ly. “There won’t be any changes to our day-to-day campus operations, and we’re excited to continue supporting the vibrant DC tech, design, and data communities. We’re grateful for our partnership with 1776 and look forward to see what they do next.”

Gleger said moving forward, General Assembly and 1776 will operate their real estate operations independently but that General Assembly still considers 1776 a community partner.

Jennifer Maher told The Washington Business Journal that as the incubator is in search of a new D.C. home, it is still exploring additional campuses in Maryland and Northern Virginia. 1776 DC’s last community event will be Demo Day for its inaugural accelerator class slated for Dec. 12.