Normally, there is a negative implication when people say “it doesn’t fit anymore”, but this implication does not apply when it comes to outgrowing office space! In commercial real estate (CRE), flourishing companies contribute to 75 percent of the leases that are signed every year. SquareFoot is the CRE company that is dedicated to helping growing companies find office space.
AlleyWatch sat down with founder Jonathan Wasserstrum to learn more about the company’s expansion plans beyond its NYC footprint and the company’s latest funding round, which brings the total funding raised to $29.4M.
Who were your investors and how much did you raise?
We’re announcing $16M in Series B funding led by DRW VC. Our major existing investors have joined again for this round. We’ve also added further to our bench some of the most senior real estate executives in the country.
Tell us about the product or service that SquareFoot offers.
SquareFoot is a new kind of commercial real estate company. Growing companies come to SquareFoot to start their office search. We believe that through educating our clients, we serve them best. We bring transparency to an industry that isn’t widely known for it, and we have a team of veteran and empathetic in-house brokers to complete the deals. Lastly, we have introduced some flexible office space solutions to accommodate all of the needs of growing companies. These initiatives were spearheaded by our clients, and we responded to their calls by providing more options than what was traditionally available.
Before business school, I worked at JLL, one of the big players in the commercial real estate industry. There, I learned a ton about how to serve a client, but I also saw some gaps surface, which turned into an opportunity. Nobody was thinking about how to best serve the growing companies that make up 75 percent of the leases signed every year. We wanted to create something that catered to them without compromising on the quality of the service being offered to them.
How is SquareFoot different?
We depend on technology to guide us. First, many of our clients find us online, where they are. We know that the process can be daunting at first, so we want to deliver the right, tailored answers to their questions. Secondly, we created an app to solve many of the inefficiencies that arise during office tours. Our app allows prospective clients to take notes and view pictures of the space during and after tours and allows them to share these notes with the rest of their team. Often, the person viewing the space is not the only decision-maker, so we use technology to encourage and facilitate collaboration and communication between various team members. Lastly, with PivotDesk and FLEX by SquareFoot, we have solutions that bring additional flexibility to our clients.
What market does SquareFoot target and how big is it?
We’ve made a big name for ourselves among growing companies in NYC. With this investment, we’ll be taking our show on the road. The market is in the billions – it’s really anyone, anywhere, thinking about their next office space. We work with companies of all sizes and stages and we treat them all with the same excellent customer service. We are establishing relationships with these companies early on and are following their journeys closely so that we can assist them in their next (and their next) searches.
Who do you consider to be your primary competitors?
I guess I’d have to say the traditional commercial real estate firms. But few of them are thinking along the lines of how we are. A couple of startups are coming up along the horizon, too. The commercial real estate industry is so big that everyone can have their piece of the pie.
What’s your business model?
We make money like a traditional broker with transaction fees – paid for by the landlord, so it’s a free service to those looking for space. Same with PivotDesk. With FLEX by SquareFoot, we play the role of ‘landlord’ and collect monthly rent.
What was the funding process like?
Fundraising is always… fun. This time around, because our dreams are even bigger than before and we’ve introduced new arms of our business, there were a lot of “what the world will look like 5-10 years from now” conversations. We’re beginning to see VCs taking more of an active interest in real estate, which is great, but that wasn’t true two years ago when I was setting out to raise for Series A. I’m pleased that more people are warming up to the possibilities in front of us. Along the way, we always pick some titans of the traditional industry, which further validates our progress to date and helps put our growth plans into motion.
What are the biggest challenges that you faced while raising capital?
Running my business simultaneously. I want to be around and available to my team in the office. Taking meetings elsewhere for fundraising was important for the business, but it pulled me away from daily interactions that I have committed to and that I really enjoy. I’m glad now to be able to get back to being more present and visible in the office to mentor young brokers on our team and to help push forward some of our exciting new initiatives.
What factors about your business led your investors to write the check?
We are perfectly positioned in the market, in my opinion. We’re not an upstart team with dreams and no experience to deliver. We’ve been doing this for a bit now and have 1,200 deals under our belt. We’ve learned a tremendous amount along the way. At the same time, we’re just getting started and we have so much promise for the future to continue to change the way this industry thinks and operates. We’ve built a top-class team that’s geared up for the next stage of growth.
Those who have heard of us by now love us and leave great reviews for us – and they tell their friends to come to us, too, when they’re in need of new office space. Now, we get to tell our story on a grander scale, to bring new people to SquareFoot for the first time.
We are perfectly positioned in the market, in my opinion. We’re not an upstart team with dreams and no experience to deliver. We’ve been doing this for a bit now and have 1,200 deals under our belt. We’ve learned a tremendous amount along the way. At the same time, we’re just getting started and we have so much promise for the future to continue to change the way this industry thinks and operates
What are the milestones you plan to achieve in the next six months?
Fundraising is meaningful, but not itself a milestone. For me, the aspects of our business that get me most excited are related to building out the team. It starts with recruiting and hiring, making sure that we design and fill the right roles. With the right people in place, we’re off to new markets and expansion of our FLEX product.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Stay focused and execute. Tune out the noise. Some companies got to their Series B funding faster than we did, but it’s not a race in that sense. Build your business and the rest falls into place.
Where do you see the company going now over the near term?
We’re especially excited about our flexible office space solutions, PivotDesk and FLEX. PivotDesk matches up hosts and guests to fill unused desks at an office. It can be expensive to watch portions of the office sit empty, and there are companies out there who are looking for desks, not a full-fledged office for themselves. FLEX, on the other hand, caters to companies that want their own office spaces but don’t want to sign a long-term lease. FLEX by SquareFoot makes it possible for companies to find the right office space, with the right terms attached to it. As flexible office space increasingly becomes the standard, I foresee FLEX by SquareFoot really making an impact.
What’s your favorite restaurant in the city?
It’s a punt, but I’d have to say my home kitchen. Cooking keeps me sane – and often provides leftovers for lunch the next day. Why go out for burgers, when you have steak at home, and burgers from Porter Road?