Swivel, an Austin-based startup that provides a workspace network for small and medium-sized companies, announced Tuesday it closed on an $8 million Series A funding round.
Scott Harmon, Swivel’s co-founder and CEO, told Built In that, traditionally, leasing office space in Austin and other similar high-growth cities is difficult. Landlords often get businesses trapped in “ironclad” contracts for five or even 10 years, which isn’t conducive to young companies that may not know how much office space they’re going to need that far in the future. Depending on how much their headcount shrinks or grows, businesses can wind up spending hundreds of thousands of dollars subleasing or breaking leases.
“This is a broken model for companies that are maybe a little younger or more dynamic,” Harmon said. “We really believe that leasing offices should be much more flexible, that you should be able to move out when your plans changed and not have to pay big huge penalties.”
Harmon says Swivel is not like WeWork, which is effectively a landlord that leases off millions of square feet to small companies for months or years. This model presents "an enormous risk because, if they can’t fill that space or if the price of the office space changes, they can really have financial difficulties, which is why WeWork’s IPO failed,” Harmon said. “Swivel is not a landlord. We do not lease space.”
If WeWork is a hotel, then Swivel is Vrbo. Its “agile leasing platform” allows landlords to rent their office space more efficiently and flexibly. Then, they share their profits with Swivel.
“We really think that, by working directly with landlords, we can change the model so that, instead of having to lease offices for years, you can come and go as you need,” Harmon said. “I think that's where we're going. We can completely transform how people think about occupying and leasing space and make it a much more flexible experience for both parties.”
This most recent funding round was led by Jim Breyer of Breyer Capital, who is known for being among the first investors of Facebook and Spotify. The round was also led by Jones Lang LaSalle (JLL), the world’s second-largest commercial real estate firm.
“We see that as a huge vote of confidence for our approach,” Harmon said. “There is no bigger expert in commercial real estate than JLL, so having them invest in the company is a huge boost.”
Swivel employs 15 people right now and Harmon expects its headcount to roughly double in in the next 12 months.
The company recently expanded to Houston and Dallas. Harmon says this new round of funding will allow the company to work with landlords nationwide, beginning with Denver in March. The company is also looking at about nine other cities for future expansion, including New York, Boston and San Francisco.
