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Docklands’ angel investor

04 Oct 2018

Docklands’ angel investor Image

By Shane Scanlan

Johnson Zhang is a passionate Docklander ready to turn the long-suffering western end of NewQuay into a business dynamo.

The energetic 37-year-old is “walking the walk” by succeeding where others have failed and now wants to help others as well.

The key to Mr Zhang’s plan is to convince landlords with empty tenancies that having a solid-start-up at a reduced market rental is in everyone’s best interests.

“The better the tenancy, the better the lease and the better their valuation is,” he said. “I say to them, why not create a lease agreement that increases the value of the asset you are holding on to?”

“If you’re a landlord of a cold shell without even any plasterboard on it, then the bank’s not going to reach out and lend against that!”

He cited a recent example were he backed a new business to take two tenancies in the old Waterfront City Piazza which, he said, meant the landlord could use an increase in bank valuation to borrow against and invest elsewhere.

“I showed them their current valuation and then showed them the difference of having a secure 15-year lease in place,” he said. “The landlord can top up a loan by more than $1 million and go and invest in something else. Their net return jumps to 20 – 25 per cent.”

He said he had accidently become a kind of “specialist agent” who not only found tenants, but became part of those businesses himself (see page 25).

“We’re kind of like an angel investor or venture capital,” he said. “I’ll go in there with a guarantee and say, I’ll help you do this business. If, in one year’s time, if you are not at the break-even point, we’ll buy it back.”

Mr Zhang is proposing a business incubator model where he provides a central business administration, advisory and marketing agency.

“There are so many people out there who want to start a business but don’t know what to do. We do the thinking for them,” he said. “The business discipline is what we add. And it’s not something you can gain by reading a book.”

Mr Zhang said he had only recently become experienced enough in business to be able to make such a model work.

“I really believe that I can add value now. 10 years ago I thought I could add value but, looking back, I didn’t have much value to add!” he said.

He’s been in Docklands for more than 10 years – starting as the manager of the Bourke St Quest Apartment Hotel. Having worked elsewhere in hospitality and, more recently, investing in his own hotels and bars, Mr Zhang has done the hard yards.

“There’s no one else who has stood up and put their money where their mouth is. I’ve invested in Docklands. I’ve sold assets in Docklands. I know how difficult it is to sell,” he said.

Mr Zhang is a contributing member of a number of Docklands owners’ corporations and loves the place.

“It’s a passion and I want to drive it because Docklands needs this,” he said. “Docklands feels like it’s the CBD and yet you don’t have the noise. You don’t have the interruptions.”

“Docklands is beautiful because it has the water. It’s really the local version of Darlinghurst or Rushcutters Bay in Sydney. It’s really no less or more. Sure, we don’t have an opera house, but so what? How many days do you go to an opera house?”

“I want to clean up my own backyard. I want to activate my own backyard. I can see a little café here, a little shoe repairer there. Maybe a little key-cutter too.”

He said support from the City of Melbourne was vital to the success of his plan to incubate new businesses here.

“I think Docklands has started to catch up to some of the fundamentals,” he said.

“But I always thought if you were really trying to drive something, don’t spend the money on fireworks. The City of Melbourne still hasn’t got the strategy right.”

“Why don’t we create an incubator business model with smaller tenancies?”

“What happens if Docklands becomes known as the small business incubator, where you can go in there and share tenancies?”

“If we’re a business that creates businesses, and helps businesses to succeed, and we are essentially a shareholder of that business, and we are seeding these businesses – a little seed here, a little seed there – then, as Docklands grows, I’d rather have 10 per cent in 10 businesses that we’ve helped to activate rather than having 100 per cent in something that doesn’t work.”

The next steps for Mr Zhang are to connect with landlords who are sick of sitting on empty tenancies and to meet like-minded youngsters hoping to set out on a new business journey.

“The people we want to bring on board are the people who are already thinking about working on a business,” he said. “There are an incredible number of ideas.”

He said he had recently met some young people making t-shirts from home and moving them via social media.

“What happens if we have a proper studio? And new machines and new line items?” he said. “These places could be subdivided and 12 dreams could come true. It could become one central business hub.”

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