Brooklyn-based co-working company Industrious raised $37 million in a Series B funding round, the startup announced Tuesday.
Riverwood Capital led the round, which also included Outlook Ventures and Maplewood and brought Industrious’ total funding to $51 million to date.
Industrious is one of a handful of firms looking to challenge $16 billion behemoth WeWork in the nascent co-working industry. The firm’s co-founder and CEO Jamie Hodari told The Real Deal that it plans to spend the bulk of its new funds on building out and opening new co-working spaces across the U.S. It currently runs a dozen spaces, including one in Brooklyn at 594 Dean Street, and wants to add 12 more.
Unlike most of its peers, Industrious chose to expand to different cities before growing within New York and has locations in places like Raleigh, St. Louis and Minneapolis. Meanwhile, its competitor The Yard has nine locations in New York and only one outside (in Philadelphia). WeWork, which currently claims to have 112 spaces in 33 cities around the globe, also started off by opening several locations in New York before venturing out to new markets.
Hodari pointed to the competitiveness of New York’s co-working market — where dozens of firms fight for market share — and to the potential benefit of being present in different cities. “There’s enormous advantages to scale,” he said, arguing that customers value the ability to find offices in places they travel to. He also argued that being in different cities gives it a better handle on what customers there want, making it easier to grow later on. “You might scale vertically in one market to a very large scale, and then it’s very hard to say to investors whether you’ll succeed in Cleveland,” he said.
Prior to founding Industrious, Hodari ran Kepler, a nonprofit university for developing countries. The other co-founder, Justin Stewart, is a former vice president at Madison Realty Capital [TRDataCustom] and served as director of acquisitions for Windham Development.
Industrious seeks to set itself apart by appealing to more “mature” (in the words of Hodari) tenants — companies that prefer a quiet office suitable for corporate meetings, rather than a common beer keg. In practice, this means Industrious has kept its spaces far smaller than the average WeWork (its Brooklyn location on Dean Street totals less than 20,000 square feet), which it claims makes them more quiet.
“I would say if you look at a lot of our competitors, the look and feel is appealing to a very different sense of style,” Hodari said, “something that is noisy and loud and exciting.”