Knotel is an impressive American startup that specializes in providing workspaces for small to large businesses. It is a competitor to WeWork and it has recently made some tremendous strides in overtaking the other companies offering similar services. Knotel is becoming a big deal in the marketplace and for those of you who are not familiar with this burgeoning new empire, here are 20 things you didn't know about Knotel.
1. Knotel has a unique specialty
One of the most impressive products that Knotel provides for clients is its "headquarters as a service" feature. This consists of the sublease of office spaces for large enterprises that are fully furnished and private. Knotel is the middle agent that leases the space from office landlords, then transforms the space with furnishings, special wiring, and customized design. They also staff it with managers for the companies that request this service.
2. It is based in New York
The main headquarters for Knotel is based in New York. The company was established in 2016 by its two co-founders Amol Sarva and Edward Shenderovich. The company began as a small startup and in less than four years it has grown into a behemoth of business with impressive growth and expansion.
3. Knotel has gone international
Kotel has expanded beyond the borders of its headquarters in New York. The company subleases office spaces in a total of 224 locations throughout the world. Some of the cities that it operates in are San Francisco, Paris, London Berlin, and Sao Paulo. Knotel leases more than four hundred million square feet of office space.
4. Knotel is a Commercial Real Estate business
The nature of the operation of Knotel is in the category of commercial real estate. Knotel does not own the properties that it prepares for clients. Staff members engage in negotiations with the owners of the properties to negotiate a lease contract. Knotel then offers the spaces that it has leased in a sublease agreement with clients in need of office and headquarters spaces. In essence, they do all of the work to secure the properties for a set amount of time that is typically a minimum of 6 months to five years.
5. Knotel has a unique marketing and revenue-building strategy
We were impressed when we learned that Knotel has designed a unique approach to building revenue. They provide much more than office space. The office build-outs that they engage in for clients include workplace layout, interior design, data security, and IT requirements as well as workspace management after the client moves in. They also operate from a profit-sharing with the landlords model.
6. The staff of Knotel is impressive
We looked into the inner workings of Knotel to learn more about how the company works. We saw that this is a transformative company that tailors each workspace to meet client needs and they maintain an impressive in-house team. There are workplace strategists, interior designers, architects, and more who work together to create the ideal workspaces.
7. They're hiring currently
We noticed on the LinkedIn page for Kotel that the company currently has 26 open positions. They are adding more staff members, especially in their London locations where business has been booming. The company maintains a workforce that consists of diverse staff members who form a collaborative culture that embraces the inclusivity of all people regardless of religion, gender, sexual orientation or race.
8. New York isn't faring as well as London
There has recently been a downturn in leasing activity in the New York area. While Knotel is currently hiring in London, there was recently a layoff of an unspecified number of workers. Between 50-60 of the NY based workers were rumored to be in peril of losing their jobs at Knotel. This occurred right after the head of the corporate finance department left the company, but there have been no confirmations of how many people have lost their jobs, or if the layoffs will continue.
9. Knotel made unicorn status
Six months prior to the announcement that there were going to be layoffs at Knotel, the company reached unicorn status. This happens when a business reaches a valuation that is at least $1 billion or more. The event took place after the last round of fundraising brought in an extra $400 million, boosting the value of the business. It was celebrated with a gala office party that included champagne and merriment.
10. The CEO of Knotel believes profitability is near
In the last few months, Sarva, the CEO of Knotel shared some exciting news from the leadership seat. Although there was recently a layoff in the Manhattan area due to a slump in the real estate market, this doesn't mean that the company is on its way down. It still enjoys unicorn status and the current financial figures show that the firm is very close to achieving profitability. This is good news for investment firms who have ridden through the ups and downs of the new startup that is just under four years old. The annual contracted revenue for Knotel was up by $100 million in 2019 and it rested at $350 million. The brief period of unrest in the market is just a bump in the road that is common and Sarva disclosed that there is every reason to believe that this year will bring Knotel to a level of profitability in revenue.
11. New York is only one of the markets Knotel serves
Even if things are not going great in one area that Knotel serves, it is alive and well in many areas of the market where the business is moving at a rapid pace. Markets including London, Paris and San Francisco can help to make up for any deficits that occur within New York and this is true of all of the 224 locations that Knotel serves. Just because one market is down it has no major impact on the others. There are also newer markets in Amsterdam, The Netherlands, Washington, D.C., and Boston.
12. Knotel has an edge over its competitors
Knotel has achieved an edge over its strongest competitor which is WeWork. It has basically taken the WeWork model and reversed it. The major difference between the two is in the branding of the subleases. WeWork maintains a strong branding presence in all of its subleases, but doing just the opposite, Knotel makes the places they sublease one hundred percent the culture of the company that they are providing the real estate and services for. Knotel keeps its identity out of it so the client has greater ownership and personality within the space.
13. Knotel is selective about the locations
Sarva shared a little bit about his philosophy when it comes to the growth and expansion of Knotel. He compared his growth strategy with that of a competitor and pointed out the differences. While some are not that picky about the areas that they expand into, Sarva and his staff choose locales that have the highest likelihood of being profitable to conserve on the use of resources. He gave an example that Cairo is not a city that Knotel could make profitable so it is not on the list of areas that they plan to serve.
14. Knotel is a late-stage funded company
Although Knotel has only been in business for just under 4 years, the company has enjoyed a high volume of investor contributions. It has had five rounds of venture capital funding so far raising a total of $560 million. The first funding was a convertible note on February 15, 2016. This was followed by a round of Series A funding that raised $25 million. On April 10, 2018, a round of Series B funding raised an additional $75 million. On October 23, 2018, the second round of Series B funding raised $60 million and on August 21, 2019, Knotel's Series C funding round closed with an additional $400 million raised, bringing the total valuation of the company to unicorn status.
15. Knotel has 5 lead investors
Knotel is a company that is backed by several lead investors from reputable venture capital firms. Wafra Partners, a private equity firm specializing in expansion, recapitalization and control acquisition financing has led two rounds for Knotel. The business is headquartered in New York, New York. Northwest Venture Partners is a global venture capital and growth equity investment firm from Palo Alto, California. Newmark Knight Frank/Sapir Organization is based in New York, New York and it is a privately and publicly held group of real estate companies managed by the Sapir family. Peak State Ventures is another round leader based in San Francisco, California. It's a venture capital investment firm that makes investments in digital healthcare, PropTech, and the Future of Work projects. There are a total of 23 investors who have an interest in Knotel.
16. Knotel is privately held
You won't find Knotel listed on the exchange market with shares available for purchase. It is a privately held company that has not yet filed an IPO with the stock market. Knotel is so well backed and financially represented that there has been no need to go public, which is mostly done for the purpose of raising venture capital funds. There has been no indication that Knotel has plans to file for an initial public offering so we're assuming that it plans to remain a privately held business.
17. Knotel is still expanding
Within the last 12 months, Knotel has been expanding the properties that they have contracts for. It has been reported that the San Francisco and New York segments have added almost two million square feet of office space to their offerings. These are larger spaces and it is believed by the leadership that these new spaces are marketable and will be contracted out in the near future. Amol Sarva doesn't get too excited about vacant properties because it takes time for these deals to come about. He prefers not to view them as vacancies but rather as available supply.
18. The founder has had to establish his reputation amidst controversy
Amol Sarva has had a lot of proving to do because of some controversy surrounding his parents. It came to our attention that there have been accusations that his father, and possibly his mother as well have been involved in a number of fraudulent money-making schemes. These include financial and tax evasion schemes. Whatever his parents may have done, Mr. Sarva has worked hard to get a good education and become a reputable businessman.
19. Knotel is good for business
Large enterprise businesses have a strong ally with Knotel. The company has the potential for saving its clients a lot of time and resources by taking care of the total setup for a headquarters including management staffing, IT, office configurations and furnishings and more. Knotel has shown itself to be a reliable resource for giving its customers what they need and working to customize the office space to fit their operational needs.
20. Knotel is a company to keep your eye one
Although Knotel hasn't been around that long it has certainly disrupted the real estate industry. They've given the competition a run for their money and this is just the beginning. With multiple offices in operation throughout various countries in the world, Knotel is an international business that is transforming the way that enterprise businesses operate and acquire office space. They offer convenience and peace of mind for the cost of a lease agreement. It might not have been the first company to offer these services, but it has distinguished itself by going over and above with extra incentives for its clients that the others do not yet provide. This is a company to keep your eye on as the prospect for continued success is looking good.
Written by Allen Lee
Read more posts by Allen Lee