Nestled between Everlane, a yoga studio, Venga Empanadas and a residential hotel, Groundfloor has an unassuming presence on Valencia Street. It's part of the social club's strategy to blend into neighborhoods.
The San Francisco startup operates three locations in the Bay Area and will open its first Los Angeles location in early April.
Its members can use the clubs as a workspace, but Groundfloor is not a WeWork clone. Rather, it's more of a modern social club where its members can organize meetups, take classes, lead group activities and build social connections.
CEO Jamie Snedden founded the company around three years ago, spurred in part by the isolation he felt during the early days of the Covid-19 pandemic.
"One thing that we realized, though, is it's not just a loneliness epidemic because of Covid," Snedden said.
"There's all this research coming out about exactly how damaging loneliness and social isolation is to the human body, and to the mind and to the brain," Snedden continued. "We have teachers, doctors, lawyers, people who've got no real need for an office or workspace element at all who want to join Groundfloor because they feel disconnected from their neighbors and where they live."
Legally known as Hotel Club Systems Inc., Groundfloor is launching a WeFunder crowdfunding campaign on Tuesday as a way to further engage with its members and cultivate a sense of ownership.
The company previously raised around $3 million since 2021 from investors including 2048 Ventures, Vitalize and Jacob Jaber, who is the son of Philz Coffee founder Phil Jaber (and the local chain's former CEO).
Groundfloor social club
Through WeFunder, the campaign already raised $100,000 in an early friends and family round, Snedden said.
He hasn't set a target amount for the current campaign, but its WeFunder page showed more than $700,000 raised as of March 15.
Eventually Snedden envisions licensing its software to third-parties, potentially as part of a franchise model. He has already received interest from a virtual whisky appreciation club.
Last year, Groundfloor's revenue more than doubled to nearly $1.4 million from $510,000 in 2022, according to financial data provided with the WeFunder campaign. Its net loss also more than doubled over the same period to just over $1.3 million.
The company has also reached a $2 million run rate for revenue and each location operates profitably with 70% gross margins, the data shows, with membership growing 20% on a monthly basis.
"We don't strictly need to take in more outside capital" right now, Snedden told me, though that could change in the future depending on its growth. "The decision to do the crowdfunding is pretty intentional. It's really about giving our members this opportunity to own their spaces."
Groundfloor scouts its locations in retail corridors that are also relatively close to residential areas. It also has kept each location's footprint relatively small.
In San Francisco's Mission district, the club is 4,000 square-feet. In Oakland's Temescal neighborhood, the club is 3,000 square-feet. San Rafael's space is even smaller at 2,000 square-feet. The Echo Park space in Los Angeles will be its largest club to date at 10,000 square-feet.
"Our basic strategy is to look for former retail space, or former office space, both of which are asset classes that are in need of some assistance," Snedden said, "and it means we often have choice in the neighborhoods that we're looking. We also really focused on residential neighborhoods."
The goal is to embed in neighborhoods. Most members live within 15 minutes of their club.
Groundfloor hasn't announced its next locations yet, but in a response to a potential investor's question on its WeFunder campaign, Snedden said he expects to open up to a dozen new locations over the next two years.
Groundfloor has around 1,400 members who pay monthly fees starting at $130. The company also provides needs-based scholarships on a case-by-case basis. Members can also contribute to programming in exchange for reduced fees.
It has also developed an app which members can use to organize events and meet other people. Groundfloor uses proprietary machine learning algorithms to match members with similar interests, as well.
One thing the app and club don't facilitate at the moment is online events.
"It's all in-house developed," Snedden said. "We don't just want to build another app ... but we do think that we can use technology to augment and improve the physical experience in the real world."
