Knotel is reportedly trying to raise $100 million in funding in a round that would significantly lower its valuation, as the co-working firm grapples with plunging revenues and mass layoffs.
The company has been in talks with a European firm for the funding since the beginning of the year, according to Forbes. The new investment would be at terms that could cut Knotel’s current $1.6 billion valuation in half, the publication added, citing a source familiar with the matter.
Knotel co-founder and CEO Amol Sarva told the publication “there is still one more financing before the company is fully profitable and growing in a way that it is potentially a public company.” He declined to comment on the funding talks.
The company has a difficult path ahead as it contends with a weakened real estate market and a national shift toward remote work.
In March, the startup laid off or furloughed almost 200 employees around the world — slashing its workforce in half. In July, Sarva announced a 20 percent drop in revenue during the second quarter to $59 million, which he said had prompted the company “to make some really big changes.”
Last year, Knotel lost $223 million, according to financial records obtained by Business Insider. According to the documents, the company generated $74 million in first-quarter revenue, but had a net loss of $49 million in the same time period. (Knotel disputed the numbers.)
The company, founded in 2015 by Sarva and Edward Shenderovich, raised about $400 million in August from the likes of Kuwait-backed Wafra and Japan’s Mori Trust. Knotel is now facing lawsuits from several landlords over rent payments.
[Forbes] — Sylvia Varnham O’Regan