Feb 18, 2022
Startup Funding: Fitness is the game changer for Venture Capital Firm
No one was surprised when Digital Fitness Company Future raised $75 Million in Funding, and the startup investors included Kate Hudson, J.J. Watt, Rory McIlroy, and Kevin Durant. The startup has one of the largest trainer networks in the United States. In India, Fitness discovery and booking platform Fitternity has raised $4 million from Sixth Sense Ventures, a consumer-focused domestic venture fund. Another Indian fitness startup, Alpha Coach, has raised funding of $1.25 million from Canada-based Jani Ventures. The cascading effects of the pandemic are expected to last for years. It is evident that the fortunes of VCs investing in fitness and wellness are improving. In recent years, funds like Able Partners and Joyance have emerged to invest in startups that make people's lives fitter and healthier. With companies like Nina Capital in Barcelona, Heal Capital in Berlin, InHealth Ventures in London, and Apollo Health Ventures in Germany, the fitness industry has exploded across Europe too.
Recent investments in fitness startups manifest a dominant trend. It is not only Future (US) or Alpha Coach (India) ; fitness startups such as Pure Gym and Another Round have also recently received huge funding from investors. Ro, a U.S.-based telehealth company, was the top VC-backed retail health and wellness Tech Company, having raised around $876.1 million in 2021.
According to international research agencies, the entire wellness market is estimated to be worth $1.5 trillion and growing at a rate of 5–10% annually. Over 9,500 startups are involved in the fitness and wellness sector worldwide, providing anything from wearable technology to online coaching. Other apps monitor fitness-related variables and dietary intake.
The Pandemic Effect
It is widely admitted that the fitness industry has undergone a remarkable shakeup and transformation as consumer behavior witnessed a major shift during the pandemic. Lockdowns and restrictions forced people to bring in home equipment such as treadmills and exercise bikes. It took plenty of time to return to gyms for weight and group exercises. The pandemic has given new momentum to the fitness industry. The pandemic made them understand that time is one of the biggest barriers for people to exercise. By bringing a train anywhere, anytime personal training solution to the market, they can reduce the time it takes to exercise. Fitness startups have been making it more convenient to invest in health. Growth drivers fit plans to customers' lifestyles, not the other way around. Fitness startups are capitalizing on their strengths, and investors do not disappoint them as they now see huge potential in the fitness industry. It is not an exaggeration to say that the Covid-19 pandemic brought digital health and wellness into the mainstream. The tech-enabled fitness industry has become a hotspot for venture capitalists and other companies startup investors.
Technology and Fitness Industry
Fitness is becoming digitized. Now people have some form of health and fitness app on their phones, and trainers are increasingly using tech to increase performance. Technology also helps in making fitness more accessible and even affordable. For example, Another Round, founded by fitness tech entrepreneur Max Cotton in 2018, applied its proprietary artificial intelligence (AI) to personal training, making it more accessible, convenient, and effective than ever. AI creates a collective intelligence that enables fitness startups to scale and grow further. Technology has been driving the growth of the fitness industry, which is evident with the size of investments being made. According to PitchBook, digital health is the fitness industry's leading segment, along with diagnostic and pharmaceuticals. These segments witnessed robust venture capital funding with mega deals in each segment. Nearly $ 3.1 billion were invested in these segments in mega deals. Digital health startups excelled in surpassing early-stage investment and stuck several deals in late-stage with late-stage VC funding. Wellness tech occupied a dominant position in overall funding.
The Magic of Market
A recent study released by World Economic Forum (WEF) revealed an encouraging trend. It was found that global downloads of fitness and health apps surged by 46%, owing to the higher adoption of online fitness training. Fitness startups are out to leverage the potential as they believe that now customers are willing to pay a monthly fee to access a customized service that works in their time frame. The online fitness market is poised to take a big leap by 2023 as the consumer base has significantly widened. The industry estimates that the online fitness market will exceed $ 30 billion in 2026. The market shows buoyancy due to people's desire to build healthier habits and fitter lifestyles, affordability, accessibility, and social impact.
According to PitchBook, investment activity in digital health and wellness peaked in 2020, earning $7.3 billion in venture capital deal value across 449 agreements. The industry had started off 2021 strong as well: In the first quarter of 2021, industry deal value hit a quarterly record of $4.2 billion across 153 deals, according to PitchBook. From a market size of less than $50 billion in 2019, the research firm projects the mobile and digital segments of the wellness tech industry would go beyond the $ 350 billion mark by 2025.
The 'Leaders' in Fit India Movement
Fitness is also gaining momentum in India, and the industry is growing day by day at a higher pace due to tech-enabled products and services. The country is witnessing robust growth in the Fitness Industry based on four pillars- desire, affordability, accessibility, and social impact. Indian Prime Minister Narendra Modi has promoted fitness a lot across the country by launching Fit India Movement in August 2019. He also promoted International Yoga Day across the country and urged people to add yoga to their daily routines. India has several fitness icons in Films and Sports.
These factors drive Venture Capital funding and other investors into the tech-driven fitness industry. Indian startups are creating and developing the fitness and health industry with various innovative ideas and plans that serve many individuals to follow a healthy lifestyle. This is evidenced by the fact that many companies already have prominent positioning in the industry. Several startups, such as 'Alpha Coach,' 'Curefit,' 'HealthifyMe,' 'Fitpass' and 'FitMeIn,' have carved a niche in the wellness and fitness market. In the fitness segment, The personal training platform 'Alpha Coach' kicked off amid the COVID-19 crisis in June 2020 and has raised funding of $1.25 million from JC Team Capital-Jani Ventures. With investment from Canada-based Jani Ventures, which prefers to invest in innovations, the startup valuation has increased to $5 million. The fitness startup plans to launch and scale up its fitness-tech platform to provide a refreshing, engaging, and results-focused fitness experience for Indians.
'Curefit' is the most funded startup in the segment, having raised around $170 million until now. 'Fitternity' is India's leading online fitness platform that provides an integrated ecosystem to help users start and sustain their fitness journey. It has raised $4 million from Sixth Sense Ventures, a consumer-focused domestic venture fund.
Other leading fitness startups include 'Cult,' which is a group of fitness centers that focuses on functional training and group classes. A mobile app called "Fitso" that focuses on fitness aims to support users in achieving their fitness objectives. 'Sarva' is a yoga and wellness startup that is getting popular. 'Tread,' 'Fitpass,' 'Actofit,' and 'Mobiefit' are some other prominent startups where investors have shown interest. In 2020 the Indian Fitness market was estimated at nearly $ 3 billion, and as per the industry projections, it is expected to cross $6 billion by 2023 and a whopping $14 billion by 2027.
The fitness industry has now been promising more to VC firms and other investors. Other top fitness-related segments' investments included fitness applications, smart device companies, digital therapeutics, and bioinformatics firms.