COVID-19 drives YBF tech hub to call in liquidators

Aussie co-working space and tech hub YBF is in liquidation, following long stretches of COVID-19 restrictions that have seen CBDs almost empty.

Calling itself Australia’s ‘original and largest tech and innovation hub’, YBF first launched in 2011 out of Melbourne’s York Butter Factory, which gave it its original name. In 2018, it rebranded to YBF Ventures.

There are now venues in Sydney and Melbourne, which have been home to hundreds of growing startups and small businesses. The business has also been backed by federal government funding.

However, with COVID-19 lockdowns leaving the spaces almost empty, and government support dwindling, the business was forced to call in liquidators.

On November 2, YBF appointed Robert Smith and Matthew Hutton of McGrathNicol.

Smith and Hutton will stabilise the business and continue to operate it, as they seek a new buyer for the assets.

Smith tells SmartCompany the reliance on co-working revenue in CBD locations was “the main driver” of the insolvency.

However he also notes the liquidators have seen strong support from stakeholders.

“There have already been expressions of interest, which is encouraging,” he adds.

YBF chief executive Farley Blackman tells SmartCompany that pre-COVID-19 the business had been on a 10x growth trajectory, with its Melbourne office at full occupancy. It was also achieving “record results” in its corporate innovation business.

But a combination of lockdowns, office density restrictions and an inability to come to a rent-relief agreement “made it clear that we needed bring in McGrathNicol”, he says.

While acknowledging that this has been a “very difficult” time, he says he is grateful for the support he’s had from the YBF team, and for the “kindness, understanding and generosity of our members and our partners”.

“YBF has been foundational to the Australian tech and innovation ecosystem and has positively impacted thousands of tech startups, scaleups, corporates and individual innovators over the past ten years through its co-working spaces, programs, investor connections and social agenda,” Blackman says.

“We’ve had a very strong social purpose.”

The challenges of operating in the CBD during lockdowns have not been unique to YBF. Smith is seeing an increasing trend of businesses that are heavily exposed to CBD activity struggling to deal with payments in arrears and mounting costs, without bringing in the revenues they would have pre-pandemic.

“As government assistance withdraws, whilst the CBD is heavily underutilised we anticipate more financial pressure on businesses.”

This news follows what had looked like a period of growth for the startup hub.

Back in April, YBF partnered with the University of Melbourne to create a new space focused on connecting academic and entrepreneurial thinkers, in a bid to boost the local tech ecosystem.

In September, it appointed Karen Cohen as blockchain expert-in-residence, charged with building a blockchain community in partnership with YBF.

That followed the appointment of Order of Australia Medal winner Winitha Bonney as diversity and inclusion expert-in-residence and cybersecurity expert Dr Omaru Maruatona as cyber and AI expert-in-residence.