The growing home fitness trend inherited from coronavirus-related self-confinement measures is whetting the appetite of investors, commanding high valuations that are nourishing the most promising start-ups and pioneers in connected and personalised fitness like Peloton. More of them have been able to raise new funds after Gymshark and Wattbike.
Like Gymshark, Zwift has been valued at more than $1 billion in a juicy round of financing completed a few days ago, pulling total investments of $450 million from KKR and other investors, including the big Permira fund and Zone 5 Ventures, the investment fund of Specialized. The others are Causeway Media, Highland Europe, Novator and True.
Zwift is an online training program that allows people from all over the world to compete in a virtual environment by cycling on their stationary bikes or running on their treadmills. It was launched in 2014 by three entrepreneurs in California who one year later started charging a monthly subscription fee of $10 for its use.
The company’s internet platform is currently connected with more than 2.5 million accounts in 190 countries, and it sees potential for a community of 100 million users. It is also planning to put out its own hometrainer, following a strategy similar to that of Peloton.
Zwift introduced its first virtual Tour de France contest in July, ahead of the recently completed physical race. It plans to organize the first virtual world cycling championships in December, working in association with the sport’s international governing body, UCI.
Specialized has described its involvement in Zwift as a strategic partnership intended to stimulate cycling around the world. Zwift already raised $120 million in a previous round of financing led by Highland Europe two years ago.
A younger California start-up involved in digital strength training, Tonal, has raised $110 million in new capital from a variety of investors, including L Catterton, a former investor in Peloton that participated in a previous $45 million round for Tonal in the spring of 2019. Interestingly, many well-known American athletes – including Serena Williams at the beginning and now also Stephen Curry – have also invested in the company. Like Roger Federer at On Running in Switzerland, they are acting as investors as well as brand ambassadors for Tonal.
The company said the new equity injection will help accelerate marketing initiatives, to scale the supply chain and logistics, to develop more content and to roll out new software-driven products.
Tonal, which was founded by Aly Orady in 2015, launched its system two years ago. It consists of a strength-training set of equipment with adaptive resistance technology that uses a motor powered by electromagnetism to control weight. Its AI-based software customizes the routine for the user’s full-body workouts. The company responded a few days ago in court to a charge by Icon Health & Fitness that it is infringing on two patents for cable trainers by saying that its system is very different.
Using a business model similar to that of Peloton, which is intended for cardio training, Tonal charges $2,995 for the set and offers members personal training sessions for $49 per month. Tonal’s system is in some ways similar to that of Mirror, another interactive home training system that focuses on softer fitness activities like yoga and Pilates and was recently acquired by Lululemon for $500 million.
Meanwhile, a small French software company, RunMotion Coach, has reportedly collected €300,000 from various private investors to help reach its goal of becoming the leading virtual running coach in Europe. It uses artificial intelligence to customize programs for road and trail running. First launched on the Apple Store two years ago, its app has also been available on the Google Play Store since April 2019. It has been adopted so far by more than 100,000 users, mostly in France, Belgium and Switzerland. After a free trial, subscribers pay €9.99 per month.