Brooklyn Navy Yard incubator/coworking space announced a deal Monday that it will merge with Philadelphia coworking company Benjamin’s Desk. The new, combined company will keep the name and branding of 1776, though Benjamin’s Desk’s Anthony and Jen Maher will take over as CEOs of the company.
Former 1776 CEO Evan Burfield will become executive chairman of the company and will spin off 1776’s Union platform as his own project, our Philadelphia brethren publication Technical.ly Philly reports.
Per BD’s Anthony Maher, no layoffs are expected in the wake of the merger, but rather more staff being brought on to help cover the “incubator system” across the northeast corridor.
Though no financial terms from the deal were made available, the Washington Post reports, citing three sources, that 1776 “struggled to stay cash-flow positive after its first year as new investments weighed heavily on its books.” The WaPo report also described the deal as a “complicated stock merger in which shareholders of both companies now hold significant ownership interests in the combined company.”
The move comes two months after 1776 lost its managing director in New York, Rachel Haot, who left with no explanation as to why from either her or the company.
One question the merger inevitably raises is whether coworking has reached saturation. For years, the space exploded with growth, clearly filling a market demand. While there have been minor setbacks in the growth of the sector, Dumbo Startup Lab closed down last year, but only because it couldn’t compete with the growth of WeWork, this is the first sign of weakness we’ve seen in the New York market to date.
1776 said the merger would not impact its plans for the swanky office it’s planning on moving into next year.
“No it does not,” 1776NY’s Penny Lee wrote by email. “We are excited about the work we are doing in the Brooklyn Navy Yard and look forward to moving into Building 77 in 2018!”