- February 1, 2021
- 6 minutes read
Office Space Startup Knotel Enters Bankruptcy
Knotel, a startup that leases and rents out shared offices and workspaces to companies and is venture-backed to the tune…
Knotel, a startup that leases and rents out shared offices and workspaces to companies and is venture-backed to the tune of $560 million, has hit hard times and now entered into proceedings for Chapter 11 bankruptcy. The company has announced that’s its commenced voluntary Chapter 11 proceedings and will sell itself to an affiliate of Newmark Group, a publicly-traded real estate firm.
Knotel is apparently a victim of the Covid-19 pandemic which widely drove down the demand for physical offices and shared workspaces. In its case, hundreds of millions of dollars in venture capital couldn’t save the company. It’s apparent that Knotel had burned cash at a very high rate in a bid to expand, being a company that’s existed for only four years.
Knotel’s bankruptcy looks like a high fall from grace, being once a hot co-working startup that went head-on with the likes of WeWork and IWG Plc (formerly Regus). Knotel had raised some $560 million in venture funding and was valued at more than $1 billion from a previous funding round. Its investors include the likes of Bloomberg Beta, Norwest Venture Partners, and Newmark, the company it’s now selling to.
As part of its bankruptcy proceedings, Knotel has obtained an urgent $20 million in cash from Newmark to provide sufficient liquidity as it works to reorganize its operations and capital structure under new ownership. Under the proceedings, Knotel has decided to shut down many shared workspaces and offices that it operates in the US.
|Knotel CEO Amol Sarva.
Photo credit: Hubert Burda Media, licensed under CC BY-NC-SA 2.0
Now set to be owned by Newmark, the publicly-traded commercial real estate company says that it’ll work to reorganize Knotel and infuse the company with needed capital to proceed with its operations. As it looks, the Knotel brand isn’t being phased out and will try to stage a comeback as most physical offices begin to gradually re-open across the US.