These guys are giving 19 startups free office space in New York City for a year to try and boost the tech scene
Hollis JohnsonGrand Central Tech is a bit of an anomaly in the world of startup "incubators," which usually give budding entrepreneurs money, mentorship, and connections in exchange for a slice of equity in the company.
GCT doesn't give investment or take a piece of its startups. Instead, it provides free office space in its co-working building in New York City for a year, plus all the "networking" elements, with no strings attached.
That's an amazing deal, and it proved compelling to over 1,000 applicants this year, 19 of which became GCT's third annual "class," which ranges from a startup that guarantees you'll sell your house in six weeks, to one that wants to change how women think about their periods.
So how are these startups able to get offices for free?
The key to GCT's business model lies in a unique relationship with the billionaire real estate dynasty, the Milstein family, cofounders Matthew Harrigan and Charles Bonello tell Business Insider.
The general idea is that by providing a year's worth of free office space to these young startups, GCT will be able to convince them to stick around and rent the other 40,000 square feet of its co-working building, creating a hub for hot startups. The rent in this second portion of the space is comparable to a WeWork, the founders say, and all the startups who have stayed in New York have opted to do so. The premise has proven sound in its first two years of operation.
Hollis JohnsonBut the truth is that for the Milstein family, GCT isn't a big money-making venture, and it's certainly not a cold economic calculation. GCT is an endeavor designed to bolster the New York tech scene, and has one foot in philanthropy and the other in business.
The start
GCT's origins lie in New York's Regis High School, where Harrigan and Bonello met as students. Regis, like GCT, is free once you get in - in the school's case, an anonymous benefactor set up a system to allow it to run tuition-free.
Later in life, the pair was talking over beers about how to recreate that sort of model for businesses, and decided to try and run a tech accelerator at Regis during the empty summer months. They were able to set up the same "no rent, no equity" formula and even tapped recent grads of Regis for internships. The budding program caught the attention of the Milstein's accountant, and the GCT cofounders were able to supersize the program into what it is now.
Because the startups in GCT are meant to strengthen New York's tech community, many of the startups have a social mission, or an eye toward bettering some aspect of life. They don't have to all be trying to cure cancer, Harrigan says, but they certainly bend away from the frivolous. And they also tend to be companies that have taken some funding, as GCT is not in the business of providing that initial seed investment.