Earlier this year, we covered the demise of flexible workspace operator Knotel.
The once high-flying startup had just announced it had filed for bankruptcy and that its assets were being acquired by investor and commercial real estate brokerage Newmark for a reported $70 million.
It was a hard fall for a company that just one year prior had been valued at $1.6 billion.
It was hard to pinpoint exactly the beginning of the end for Knotel, which had raised about $560 million in funding. Some said the pandemic was the nail in Knotel’s coffin, while others pointed out the proptech was already in trouble before the pandemic hit, facing a number of lawsuits and evictions.
Then this past weekend, Knotel co-founder Amol Sarva shed some more light on the situation -- essentially publicly trashing Newmark, which had co-led the startup’s $70 million Series B in 2018.
In a letter that he emailed to an unspecified group of people, Sarva points out that the company had reached “nearly $400mm of run rate in early 2020, posted gross profit, and even kept more than 2/3 of revenue intact while doing everything we could to support customer continuity and work with landlord partners amicably.”
He went on to describe Newmark as “a stalking horse” that used bankruptcy to take control of Knotel with around $100 million of new capital. That process, he said, undermined important relationships and “hurt lots of customers and partners.”
“I'm so disappointed that this was the direction pressed. The process made clear to me that I would not choose to be part of the new owners' way of moving forward,” Sarva continued.
He further criticized Newmark, saying the brokerage has hired “a group of Adam Neuman-era [sic] WeWork bros to lead the company forward.”
Newmark had not yet responded to a request for comment at the time of writing. While it's safe to say that Sarva is bitter about the way things turned out, it would be interesting to know exactly at what point he came to this conclusion.
He did say that he's heading back to the lab where Knotel was invented originally, as co-founder/CEO of Knote.