PivotDesk Launches in 23 New Markets in Rapid Nationwide Expansion

4/30/14Follow @MichaelXBD

Fresh off raising a $3.8 million Series B round, PivotDesk is expanding its footprint dramatically, announcing today it is launching its service in 23 new markets. The move nearly quintuples the startup’s number of markets and puts it in hubs such as Chicago, Seattle, and Austin, TX.

PivotDesk is a Boulder CO-based startup that has built an online service that helps startups in need of office space find a home and also connects startups with extra space with “guests” to occupy it and help pay rent. Guests pay a monthly fee based on the number of people they have using the host’s office. PivotDesk also has features that manage payment processing and creating the equivalent of a lease.

The company was founded in 2012 and is a Techstars graduate. Foundry Group, David Cohen’s Bullet Time Ventures, Draper Associates, and the Iron Yard are investors. With the recent round, PivotDesk has raised $7.3 million.

PivotDesk will be in 29 cities after the expansion. Among the new cities are Detroit, San Diego, and Houston.

PivotDesk’s value proposition is that it helps startups deal with a mismatch between their unpredictable growth and need for space and the commercial real estate industry’s reliance on long-term leases, co-founder and CEO David Mandell said. Very early stage startups can use PivotDesk to find space without being locked into a lease. Startups that have signed leases for large offices can use PivotDesk to fill their vacant space until they grow into it or fill empty desks if they have to contract.

After taking some time to establish roots in its home markets of Boulder and Denver, PivotDesk has been growing rapidly. It expanded into New York City and San Francisco in the spring of 2013 and added Boston and Portland to its mix last fall.

With the growth of startup communities around the country, the company thought it was the right time to make its big move.

“We have not only two years’ experience, there’s a lot of demand from markets around the country, along with people starting to know our brand, which makes it go a little smoother,” Mandell said. “So we said this is the right time to do it.”

PivotDesk was able to gauge which cities were ripe for expansion through a promotion it ran last year on its website that asked entrepreneurs to tell the company about their cities and why PivotDesk should open up shop there.

“That actually gave us a whole lot of data about demand and to know where people wanted us to go the most,” Mandell said.

But expanding the company’s footprint hasn’t been easy, Mandell said. PivotDesk faced the growing pains all startups face, but it also had to deal with the challenges that come from trying to find a niche in the commercial real estate industry. Mandell likened it to “hand-to-hand combat.”

“We were in essence creating a whole new marketplace with PivotDesk. [Sharing offices] was not something people thought of at the time, so we really needed to spend our time doing a lot of solid groundwork before we launched in a market,” Mandell said.

“Over the past 18 months or so, the brand has gotten much, much stronger. People are starting to understand who we are, and some people are even starting to use our name as a verb,” for finding or sharing office space, he added.

Mandell admitted that nearly quintupling the number of cities PivotDesk serves presents a challenge, but said that the company and its investors are confident it will work.

“Our goal is to flip the switch all at once,” Mandell said. “We’re going to work as aggressively as we can in every market all at once.”

“We’re hoping that the strength of our brand, word of mouth, and more people understanding what we do is going to help those markets grow much quicker than those original markets did,” he said.

In other news, PivotDesk also released an e-book today titled “Build, Grow, Learn, Know: The Wonderful Life of a Startup.” The short book is written like a children’s book, and Mandell said writing it was a chance to take a humorous look at the struggles of building a startup.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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