WeWork competitor Knotel announced Monday its acquisition of commercial real estate search engine 42Floors.
Knotel, a flexible office provider for larger, more established companies, was founded in 2016 but has snapped up more than one million square feet of office space to build into more than 60 locations since. The acquisition will give Knotel access to data on 10 billion square feet of office space, according to a Knotel press release, and will further the firm’s plans for a blockchain platform named Baya.
The news follows Knotel’s June acquisition of German workspace operator Ahoy!Berlin, which reflected the company’s push into the European market in London and Berlin.
Knotel said it is seeking to disrupt the real estate industry by investing in blockchain technology to reduce transaction costs and increase transparency. CEO Amol Sarva called the industry a “dark market” in the acquisition press release, and expressed hopes that blockchain would speed up the process of digitization that has lagged in the office leasing space.
In March, the company announced a KnotelCoin offering—essentially a Bitcoin for real estate—that would utilize blockchain to organize crowdsourced information on office spaces and reward contributors with the decentralized currency. Baya is now the new name of that platform, according to a spokeswoman for the company.
In the past three years, Knotel has carved out a niche in the co-working industry by focusing on larger, more established clients in high-growth phases who are looking for a space of their own. The firm has raised more than $100 million in funding to date, and claims to be growing at “a rate over 2x faster than its largest competitor.”
“We’re behind the scenes a bit more than some of our competitors,” said Sanjiv Sanghavi, VP of product at Knotel. “The client is bold and up front, and Knotel’s branding is less evident. The [client] gets to like feel their own culture is in play, and the office is really just being powered by us.”
WeWork also offers private offices and custom office build-outs for companies larger than 50 employees, the latter of which has served companies such as Adidas, Facebook and Starbucks. However, Knotel has worked to emphasize its flexibility and dedication to cutting edge technology through its “Agile HQ Platform.”
“We have an entire system in place that allows us to deliver office space to someone, and we give them the platform that allows them to be nimble,” Sanghavi said.
For CoverWallet, a three-year-old small business insurance company that currently works out of a Knotel office space, Knotel was simply a better fit than WeWork once the company had grown past 20 employees.
“We have had explosive growth in both customers and employees,” said CEO of CoverWallet Inaki Berenguer. “We were very paranoid about signing a real estate lease that you had to commit to [for] three years or more.”
CoverWallet initially started out in a WeWork, but moved into an investor’s office space and then Knotel after the company grew to over 25 employees. Berenguer said he made the decision to use Knotel because he had no idea how much the company would grow or look like past a six months, and appreciated having an office space with the company’s own brand and personality.
CoverWallet doubled its employees from around 50 to more than 100 in the last year, and expanded to take over the entire floor of the Knotel space they currently occupy. The company is currently on a six-month lease. Berengeur said they would consider moving out of Knotel once they hit a certain size, but for now, the flexible office space suited them fine.
According to Sanghavi, Knotel takes a holistic “workplace strategy approach” to its products, providing a mix of digital and physical tools to the mobile modern workforce. Knotel’s other offerings include Knotel Gather, a coffee shop-meets-office space where members can host external guests and recharge with a change of scenery, and Experience by Knotel, a showroom in New York’s NoHo district that serves as a physical demo space for potential clients.
“We see the opportunity globally to be much, much bigger,” Sanghavi said. “Now that we’ve nailed our model in New York, over the next few several months, you’ll see a lot more expansion.”
