Fast-growing startup tech companies outgrow office space quickly.
That’s led to the popularity of co-working sites like WeWork but the WeWork model comes with shared space with others and doesn’t include company branding, said Scott Harmon, Founder, and CEO of Swivel, an Austin-based office leasing platform.
“It’s like working at the mall,” Harmon said.
That’s where Harmon and Mike Maples Jr., partner at Floodgate, a Silicon Valley-based VC firm, saw a sweet spot. They founded Swivel in Austin in late 2016 to deliver a short-term office leasing alternative for companies.
But it’s different from its competitors, New York-based Knotel, which leases office space directly to companies, and WeWork and Liquidspace, which target individuals and small teams with coworking and office space. Instead, Swivel targets middle tier, growing companies of 10 to 200 people looking to level-up from coworking spaces or expand into bigger private fully furnished offices, Harmon said.
Lately, Swivel has seen a lot of interest from companies that once worked out of WeWork and are uncertain about WeWork’s future since the withdraw of its IPO and the departure of its CEO, Harmon said.
Swivel functions like Amazon Web Services for office space, Harmon said. Its platform provides a one-stop-shop for companies to search for space they need, easily lease it from one year to three-year leases and move in quickly. And if they outgrow a space, they can level up easily, without worrying about subleasing their old space, he said.
“There’s a well-known axiom in the real estate industry: “the most expansive real estate is space you don’t use,” Harmon wrote in a blog post. “Hands-down, the savviest business strategy to lease a workspace is to pay for it in shorter, incremental “chunks” after you are certain about the size of your workforce. That means one to three years for most teams.”
Harmon knows the problem first-hand. He has founded and scaled several tech companies in the Austin market including Motive in 1997 with Maples, which they took public and it was later acquired. He was also part of Tivoli Systems along with Maples, which IBM acquired. And he has led other companies including Noesis Energy and AlterPoint and served as an entrepreneur in residence at Austin Ventures.
Swivel also takes a lot of the pain away from companies that must move into larger spaces, by providing turnkey office space. Swivel allows the companies to lease furniture to outfit the space and move in quickly, Harmon said. And those companies can also personalize their workspace with artwork, plants, kitchen appliances, monitors, whiteboards and more.
Swivel takes a small percentage of the rent each company pays to lease space. It works with landlords like Capital Commercial Investments, Equitable Commercial Realty, Endeavor Real Estate Group, HPI, Kucera, PS Business Parks and leasing brokers such as Aquila, CBRE, Cushman & Wakefield, JLL, LiveOak, Site Select Group and Transwestern.
Swivel is available in Austin, Dallas and Fort Worth, Denver, Houston and San Antonio. It plans to move into more markets next year.
Swivel has raised $6.6 million in seed-stage financing in three rounds, according to filings with the Securities and Exchange Commission. It has also generated some buzz. CNBC first wrote about the company, which was then code-named Poquito, in June of 2017. And the Austin American-Statesman wrote a story in June of 2018.
And Swivel may soon become its own customer, Harmon said. The company, with 10 employees, plans to double in size in the next year and will be needing a bigger office, Harmon said. And it knows just where to go to find the space it needs in the Austin market, he said.
