Co-working startup Mindspace recently raised $20 million from Crossroads, a private equity firm in the UK, as it gears up to launch its first two locations in the U.S. While Mindspace is looking to go big or go home in the U.S., it’s starting off slow with its first two locations in San Francisco and Washington, D.C. Mindspace started in Tel Aviv about four years ago and has since expanded to Germany, Poland and the United Kingdom.
Mindspace, in addition to physical office space, offers fully furnished spaces, internet, cleaning services, a fully stocked kitchen, a gym, community lounges and support configuring VPNs and private servers. While Mindspace considers itself to be a premium co-working space provider, its pricing is competitive with other spaces.
“We offer a much more flexible model than the traditional leasing market,” Mindspace co-founder Dan Zakai told me over the phone. “Flexibility is a big component.”
What makes Mindspace different from the likes of WeWork and others, Zakai said, is its emphasis on design and attention to detail.
“Each and every one of the spaces is unique and well-designed,” Zakai said. “There’s a lot of soul put into every one of our locations.”
When Mindspace started a few years ago, those seeking co-working spaces were mostly startups and freelancers from a variety of industries, he said. Over the past couple of years, Zakai says he’s seen more enterprise companies moving into Mindspace locations. Microsoft, for example, took over two floors in one of Mindspace’s locations in Israel this month. Other Mindspace customers include Booking.com, Spotify, Siemens, Samsung and Techstars.
“A lot of companies don’t know how to run their offices, how to create the right culture and vibe for their employees,” Zakai said. “This is something we’ve mastered over the years and I think that’s the key to keeping those companies with us.”
Similar to WeWork, Mindspace does not purchase the buildings outright. Leasing means less cost upfront and no interest payments on mortgages. Instead, Mindspace leases them and then makes them fit the startup’s needs.
“It’s a totally different expertise,” Zakai said. “Buying it means you need expertise in understanding the real estate market. We do operate real estate. It’s a main feature of what we offer, but our expertise is about how to design our spaces, how to create interactions between our members. It’s about building a community, making it a sustainable one and creating a lifestyle for the members. We’d be a very different company if we had to buy the real estate.”
To date, Mindspace has raised $35 million in funding. WeWork, of course, is moving ahead in full force. In August, WeWork raised a hefty $4.4 billion round from SoftBank Group and SoftBank Vision Fund. With that funding in hand, WeWork swooped up coding school Flatiron School and Meetup, both for an undisclosed amount.