As It Battles Landlords, WeWork Rival Knotel Is Trying To Raise $100 Million
Flexible office startup and WeWork rival Knotel is attempting to raise as much as $100 million, according to three sources familiar with the matter. The company, which has previously been valued at a reported $1.6 billion, faces a decimated real estate market across the globe, and particularly in the U.S.
The new round is being coordinated by a European firm, and it could cut Knotel’s valuation in half, one source says. The talks have been ongoing for several months, beginning at the start of the year; it is not clear whether Knotel will be able to generate sufficient investor interest to close a deal.
Speaking to Forbes last week, Knotel’s founder and CEO Amol Sarva declined to confirm the news, saying only that “there is still one more financing before the company is fully profitable and growing in a way that it is potentially a public company.”
It has been a difficult stretch for the startup. In March, as the COVID-19 pandemic intensified, Knotel let go of half its staff. By then, to Sarva, it was obvious the economic downturn would last months, if not longer. “Looking at how the U.S. government was behaving, I could not draw any confidence,” he says. “It was pretty clear that it was going to be a lot worse of a problem than it should have been.”
The damage continued into the second quarter, when Knotel’s revenue shrank roughly 20% as compared to quarter one, to approximately $59 million, though Sarva notes that is still double last year’s second-quarter figure. Knotel cut expenses in part by not making all of its rent payments. It now faces lawsuits from multiple landlords.