Flexible workspace provider (and one-time unicorn) Knotel revealed this week it had filed for bankruptcy and that its assets were being purchased for a whopping $70 million by investor and commercial real estate brokerage Newmark.
Knotel planned, developed and operate custom headquarters for Businesses. With "flexible" terminology, it then handled the spaces. It was reportedly priced at $1.6 billion in March 2020.
Jonathan Pasternak, a partner in New York-based Davidoff Hutcher & Citron's bankruptcy, restructuring and creditor rights group, claims that the Chapter 11 filing of the firm was unavoidable despite hitting unicorn status after raising $400 million in Series C funding in August 2019.
It is worth taking a look at the roller coaster ride it was on before it got to that point if a business that has earned more than half a billion dollars ultimately implodes.
Knotel was founded by Virgin Mobile Co-founder Amol Sarva and ex-VC Edward Shenderovich, effectively reversing the WeWork model.
In February, Knotel raised a $25 million Series A round from investors including Peak State Ventures, Invest AG, Bloomberg Beta and 500 startups. It marketed its offering as "headquarters as a service" or a versatile office space that could be tailored to each occupant while also increasing or shrinking as needed.
In April, Knotel announced the Series B funding from Newmark Knight Frank and The Sapir Organization of $70 million. The company announced in August that it managed more than 1 million square feet across 60 sites in New York, London, San Francisco and Berlin and that by the end of the year it was on target to hit 2.5 million square feet and $100 million in sales.
Knotel has announced the completion of $400 million in funding, led by Wafra, the Kuwaiti Sovereign Wealth Fund's investment arm. The business had gained unicorn status with the round.
In late March, because of the effects of the coronavirus, Forbes announced that Knotel had laid off 30 per cent of its workers and furloughed another 20 per cent. It was estimated at about $1.6 billion at the time. In the second quarter, Knotel’s revenue slipped by about 20% to about $59 million compared to the first quarter, reported Forbes.
Knotel files for bankruptcy and agrees to sell properties for a reported $70 million to investor Newmark after being priced at $1.6 billion less than one year ago.