Amol’s Take on Series B: Knotel closed $70m, what are we going to do with it?

by Knotel: Apr 12, 2018

As we’ve just announced our Series B, we’re excited. In the spirit of transparency, I want to detail as to where exactly this money is going. Right now, companies work with Knotel because they save money while receiving a bespoke office environment that speaks to their needs and values. The Agile HQ, we call it.

The primary uses of this capital will be to improve our current offering, while also executing on some of new ideas emerging from the lab here at Knotel. For our existing clients, our goal is giving our members the freedom to build their own office culture and focus on the future. For potential clients, this capital will give us the opportunity to provide the best possible spaces for them at the onset, while also laying the groundwork to help ensure that our clients will never have to sign a new lease again. And hundreds (soon thousands) more Knotels, so nobody ever needs to look beyond our offering.

Right now, we have hundreds of potential clients in our pipeline who are interested in a space. The lion’s share of this capital will be allocated directly to expanding our property portfolio. Not only will we have enough inventory to service current demand, but also will be able move our customer companies into spaces that make sense for their headcount. The more space we have, the better our offering becomes. More dots on the map. No property company in New York has more to offer in more parts of town. And the lead we have is expanding.

Huge kingpins of real estate backed us in this financing round. Backing from major players in real estate in tandem with demand from companies large and small confirms Knotel’s thesis that flexible offices are the most appealing real estate solution for the agile companies of the future. This kind of capital commitment cements our status as the market leader in Agile HQs. Come and get us, copycats.

Much of this projected increase in property inventory is simply to meet this year’s demand.  Companies are realizing that the price point that comes with flexibility is actually a significant discount from what a traditional lease really costs:

  • Starting in 2019, according to new accounting rules, a company’s lease is considered a balance sheet liability
  • Top management brain damage and overhead in finding an office, furnishing it, building it out, managing it.
  • Repeat.

This list includes overt costs, but does not include invisible costs, which we will teach you about in this series of posts or when you call us. An agile, flexible office reduces lifetime total cost of ownership, and allows companies to use their money and space more efficiently. Boards love it. CFOs sign onto it. CEOs prefer it.

Strategically aligning with real-estate companies confirms Knotel’s ability to be able to successfully work with incumbents in the real-estate space, and also signals that the flexible market is being embraced by the broker community as well. Brokers like working with us. Landlords like working with us. Knotel fills spaces almost instantly, and we don’t ask much from the brokers and landlords we work with. We are looking forward to working together to expand what is proving to be an in-demand solution on the tenant, broker, and landlord side. I can’t tell you how excited I am for the rest of 2018. This is just the beginning.

–Amol