Right, this is a co-working space that does mild cofounder screening and takes 1% of your company.

If they can make connections better than I can on my own... if they can, say, evaluate and help negotiate a partnership with a business person better than I could and/or provide good ongoing advice and connections... or if they provide a prestigious credential, it's cheap.

Of course, I don't know if they can provide any of those things not worse than I could provide them myself.

I do think the fee alone would be too low, unless it's just a social club. And... if the founders fail to convince people of the above, that sounds like it could be a good way to take it.

The equity is also there to ensure that the organization has aligned incentives. From our conversations with people that have just a desire to start a company, but may lack the experience, team, or social capital to do so, we believe the equity stake asked for is reasonable.