This week, the flexible workspace operator (and one-time unicorns) Nototel announced that it had filed for bankruptcy and had assets Being achieved Investors and commercial real estate brokerage for Newmark Reported $ 70 million.
anklet bells Design, build and run custom headquarters for companies. The spaces were then managed with the words “flexible”. In March 2020, it was reportedly Which costs 1.6 billion dollars.
At first glance, one might think that the WeWork rival, which had raised about $ 560 million since its 2016 inception, was another casualty of the COVID-19 epidemic.
But New York-based Notlot was reportedly in trouble – facing multiple lawsuits and expulsions – before the epidemic also hit, according to several reports, such as this one in the real deal.
As such, some industry observers believe that the company’s Chapter 11 filing was inevitable despite this Unilateral reach After raising $ 400 million in Series C funding in August 2019.
Newmark’s purchase of Nottale’s assets is believed to be due to Jonathan Pastrnak, a bankruptcy attorney, and P., attempting to recapture some of his investments.New York based artist in Davidoff Hatcher & Citron.
Ever a company that has raised more than half a billion dollars, it is worth taking a look at the roller coaster ride before it reached that point.
Virgin Mobile co-founder Amol Sarve and former VC Edward Shenderovich essentially founded Notel Reversing the WeWork Model. There is hype around the company in its early days.
Nuttle raised Series A round of $ 25 million In February from investors such as Peak State Ventures, Invest AG, Bloomberg Beta and 500 Startups. It marketed its offering as a “headquarters as a service” – or a flexible office space that could be customized for each tenant when growing or shrinking as needed.
In April, Nototel ANewmark Knight discontinued $ 70 million Series B financing led by Frank and the Sapir Organization. In August, the company told me That It was operating over 1 million sq ft in 60 locations in New York, London, San Francisco and Berlin, and was on track to reach 2.5 million sq ft and $ 100 million in revenue by the end of the year. According to the company, revenue growth has increased by 300% year-on-year. Customers and users and customers reach enterprise customers from VC-supported startups Stash and HotelTight to The Body Shop.
“What they’re doing is different,” said Barry Gosin, CEO of Newmark Knight Frank, in a press release at the time of the round. “This is a new category that the industry has not seen and is rapidly adopting. We have seen their ascent from afar and are thrilled to join them on the journey now. This is a sign of how the owner and tenant are coming together. “
in August, Notel announced the completion of a $ 400 million financing led by Wafra, the investment arm of Kuwait’s Sovereign Wealth Fund. With the round, the company had Achieved unicorn status And being deferred as a formidable WeWork contestant. At the time, Natal said it operated more than 4 million sq ft in over 200 locations in New York, San Francisco, London, Los Angeles, Washington, DC, Paris, Berlin, Toronto, Boston, Sao Paulo and Rio de Janeiro. did.
In a statement at the time, CEO Serv said: “Notel is building the future of the workplace, and we are excited to welcome a group of investors who believe in our product, vision and ability to execute Huh. Wafra will help us continue rapid global expansion and strengthen our position as a leader in a fast-growing, trillion-dollar resilient market. “
In late March, Forbes informed of That Due to the effect of the coenovirus, Nototel had laid off 30% of its workforce and made another reshuffle of 20%. At the time, it was valued at approximately $ 1.6 billion.
The company started the year with about 500 employees. According to Forbes, by the third week of March, it had a lead of 400. With the cuts, nearly 200 employees remained with the other 200 either lost their jobs or were on unpaid leave.
“Business as usual is over,” Amtel Sarve, CEO and co-founder of Notel, said in a Forbes statement. “Nototel has decided to take swift action to prepare for the worst-case scenario – a protracted health and economic crisis.”
In the second quarter, Nototel’s revenue declined nearly 20% compared to the first quarter to about $ 59 million. Many landlords had filed The case Against the company.
By July, Forbes had reported that according to various sources “familiar with the matter”, Nototel was trying to make a profit of $ 100 million.
anklet bells Files for bankruptcy, The investor agrees to sell the property to Newmark for a reported $ 70 million after being valued at $ 1.6 billion less than a year earlier.
“Newmark’s commitment provides a way out amidst this challenging climate,” CEO Serv said in a statement. “We are optimistic that, through a successful restructuring, we can revisit our mission to provide state-of-the-art space tailored to flex space in the US and international markets.”
To facilitate the transaction under Section 363 of the United States Bankruptcy Code, an affiliate of Newmark agreed to provide Deitel with approximately $ 20 million as DIP financing to support Notel through the bankruptcy process .
Just as the world of startups and VCs see that WeWork has lost significant value in the last two years, we’re noticing the demise of Nototel and wondering what it means for the flexible workspace sector. As much of the world continues to operate from home and office buildings remain mostly empty as this epidemic spreads, we estimate that things will deteriorate before they get better.