Knotel announces $70m investment
Knotel, a major rival to WeWork, has announced that it closed a $70m Series B financing round. The round — led by Newmark Knight Frank and The Sapir Organization, and including The Wolfson Group, The Moinian Group, and Wainbridge Capital — brought together leaders in real estate to back Knotel’s vision of the future workspace.
Founded in 2016, Knotel designs and runs bespoke locations for established and growing brands. An alternative to a lease and current coworking models, it provides ‘flexibility to provide companies with a home and the ability to evolve at will’. Knotel agrees a profit-share with the landlord on behalf of the tenant, in a similar way to a hotel management contract with the building owner. A spokeswoman for Knotel said: “Our deal structures vary from property to property. Our goal is always to deliver value to owners through reliable revenue or occupancy in all-weather conditions. We do not comment on the specifics or revenue details.”
Knotel plans to use its new funding to more than double in size this year and deepen its coverage in core and new markets among mid-market and enterprise businesses.
Additionally, the company is currently working to create a blockchain-based record of available commercial space, and tenants seeking that space. Knotel will begin creating the records by adding its own current data and that of its partners, including square footage, pricing, information about a building’s history and images, according to a whitepaper published by the company’s Knotel Koin division.
The funding comes on the heels of rapid growth for the workspace provider, which in two years has opened forty locations across New York, San Francisco, and London, totaling nearly 1 million square feet. Current big names using Knotel’s facilities include Starbucks, Stash, and The Body Shop.
“We’re just getting started,” said Amol Sarva, co-founder and CEO of Knotel. “Giving companies the freedom of agility has been our mission from the start, and adding these partners to the team is both a validation and gateway. We couldn’t be more excited.”
“What they’re doing is different,” explained Barry Gosin, CEO of investors Newmark Knight Frank. “It’s a new category the industry hasn’t seen and is rapidly adopting. We’ve watched their ascent from a distance and are now thrilled to join them on the journey. It marks a shift in how owners and tenants are coming together.”
Knotel’s founder Sarva has a long history of technological innovation, having co-founded Virgin Mobile USA, Peek, and HaloNeuroscience. It was the experience running these businesses that inspired Sarva and co-founder Edward Shenderovich to establish their workplace solution.
“We’d watch as companies we were building would move every few years, pouring resources into it each time,” recalled Sarva,. “It was brain damaging. It was also a distraction from the goal of creating beautiful things.”
“Every successful business I’ve been a part of has been flexible,” said Shenderovich, whose investments have included Plated, DeliveryHero, and TradeShift. “That’s been the hallmark – an ability to innovate. A 10-20 year lease in the face of 2-year forecasts is outdated, no matter how large you are. To compete is to change and until now, there’s been no way to match an agile agenda with an agile footprint.”