Knotel, The Uber Of Office Leasing, Just Raised $25M

Knotel, aiming to be the Uber of office leasing, has raised $25M, financing that the rapidly growing firm’s co-founder, Amol Sarva, said will be used to open 40 more locations in New York City by next year.

While Sarva said $25M is a “tidbit” in venture capital land, in the real estate tech realm it is a pretty big deal.

“This financing signifies that we’re opening a new front in the way people find and use office space,” said Sarva, also a co-founder of Virgin Mobile.

Knotel provides 50 enterprises with custom HQs in various locations across New York, and the company has grown at a breakneck pace. It launched in 2014 with 10k SF in its network; currently it has 200k SF, “and we’ll be in 1M SF by year’s end.” Sarva said Knotel’s rapid rise has been driven by a desire from company leaders for alternatives to a "broken" old-school leasing model.

Innovation is changing everything for companies, except, Sarva said, where they work. Knotel offers business leaders flexibility, with a network of on-demand, custom-suited locations where growing firms can establish HQs that are "culture-coded" to their specific needs.

Knotel, which assists with set-up and move-in support, frees expanding startups from the “antiquated real estate practices” of being locked into long-term leases and dealing with costly overhead and large upfront deposits. In a $1 trillion New York office market that is dominated by long-term lease deals, Knotel’s e-commerce-inspired business model can help burgeoning firms remain agile, grow fast and save money.

Knotel applies an Uber purchasing process to office leasing, and Sarva said it can plug entire teams into headquarter spaces in a matter of days.

“A CEO can open their phone on Sunday," he said, "browse spots, hit a few buttons, and get set to take possession two or three days later.”

Knotel does not own its spaces; it works for owners, managing properties under its brand and generating greater value than they could themselves. “We’re bringing the hotel model to the office market.” Via a tech platform, Knotel manages facilities, ensuring WiFi is working and coffee is well-stocked, and providing tenants with event info and boardroom booking.

“We’re running a complex service organization," Sarva said, "and the tech makes it possible.”

Co-working offices already employ tech to acquire customers and manage their workplace experiences. They're a good fit for smaller groups, but Sarva said the vast majority of the market wants proper head office space.

Knotel’s network, which offers "headquarters as a service," enables company leaders to choose a space that is scalable, with the option of expanding or contracting the footprint based on business flow.

Today’s CEO does not know how fast their product will catch on, said Sarva, or when they will need to scale the sales team. “But they need HQ space, not a cubicle under the blinking neon sign of someone else’s brand.”

VC investors are thinking critically about the burgeoning real estate tech landscape, Sarva said, and there is a “huge amount of headroom” for Knotel to expand in New York, with 450M SF of office and $40B in annual revenue (when Uber started, he said, the U.S. taxi market was $10B).

Knotel’s business is “on fire” in New York. But Sarva said the new financing signals his team’s grander ambition: "to build a major global enterprise that will transform the office market to the benefit of owners and company leaders.”