Analysis: investors have pumped $7.3B into ~730 US-based fitness apps and services over the past five years, with $2.4B coming just in 2020 across 187 deals (Christine Hall/Crunchbase News)

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Sometimes the best way to know something works is by trying it out yourself.

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Health and fitness-related goals are commonly a New Year’s resolution for many consumers, so we decided it was worth asking five venture capitalists who invest in fitness apps and platforms, how they go about evaluating potential investments. Some of them tried out a few apps or products, while others tried out as many as they could get their hands on, as they decided what to invest in and what to pass on.

When it comes to fitness apps and platforms, what’s more certain is there is big money to be had in the sector, in part due to the global pandemic keeping everyone at home for much of 2020. Not only did home become a workplace, it also became a gym.

Investors pumped $7.3 billion into just over 730 U.S.-based fitness apps and platforms in the past five years, with $2.4 billion coming just in 2020, according to known funding rounds within the Crunchbase database.

Tim Chang, Mayfield Fund

Tim Chang, a partner at Mayfield Fund, 1 was a seed investor in Tonal, a smart home gym that uses artificial intelligence and coaching to provide strength training, in 2015. He has been involved in health tracking, training and nutrition for the past 20 years, and his particular interest was in weight lifting.

“I tried all of the devices and every machine — even building out a home gym,” Chang said in an interview. “Tonal was wonderful and became a huge part of my identity. When Tonal came along, I understood it because it was where personal passion fits where you invest, but initially, no VC wanted to touch it. Silicon Valley looks down on strength training. They think it is for ‘meat heads,’ and only want to focus on distance sports without sophisticated equipment.”

Tonal did go on to raise $200 million in known funding since it was founded in 2015, according to Crunchbase data. It was something that Chang knew would eventually happen.

“It’s gratifying to see the market catch up to what I’ve always known,” he added.

Elizabeth Edwards, H Venture Partners

An early investor in Peloton, Elizabeth Edwards, founder and general partner of H Venture Partners, was able to look at the manufacturing prototype for the app-connected stationary bike. This was prelaunch, and there weren’t any classes to sell yet, but Edwards saw the product’s potential.

“What sold us was the quality of the bike, the plans and the type of content they were looking to do,” she said in an interview. “It was taking that SoulCycle experience and bringing it into your home. I was familiar with the type of content, doing yoga for the past 15 years.”

While she likes the bicycle part, Edwards leaves that to her husband and is much more into Peloton’s streaming yoga content, which she exercises alongside frequently. She also hopes Peloton will come out with an elliptical product.

Peloton, now a public company, went on to raise a total of $994.7 million in known funding, according to Crunchbase data.

Todd Dagres, Spark Capital

Spark Capital founder and Partner Todd Dagres recalls trying out Mirror, a connected fitness platform that streams classes via a mirror-like screen, after the company first got started in 2016. It was a unique experience, not only because he could touch and try it, but he could feel the results.

“We were able to demo a prototype, and that helped a lot,” Dagres told Crunchbase News. “We were sold on Mirror when we saw how different and unique it was, and we also felt it was an opportunity to be a leader in emerging categories.”

Spark went on to lead both Mirror’s $13 million Series A and $25 million Series B in 2018. Mirror was later acquired by Lululemon for $500 million in June 2020.

Dagres himself then co-founded a connected fitness platform, Liteboxer, that provides a boxing experience with music and training. The company raised $4 million in seed funding in 2020 led by Will Ventures.

Kyle Lui, DCM Ventures

There are two things to know about Kyle Lui: One, he is a big product guy — you name the fitness app or platform, and he has probably tried it. Two, he thinks that asking someone “what is your at-home fitness set-up” is a common question in 2020, but definitely was not in 2019.

“I try them all,” the DCM Ventures partner said in an interview. “I’m passionate about the space and am looking for the next compelling product.”

Lui said there is a lot of room in the fitness space, and while a product might speak to him, he knows it doesn’t necessarily speak to others. Some of the products and services he’s tried had a good brand and marketing, but lacked true uniqueness. He also thinks some of the pure digital experiences — those with one-way interactions — wouldn’t be able to keep consumers’ attention long-term, he added.

He was most recently involved in Tempo’s $60 million Series B. Tempo is a home fitness platform that combines equipment, training guidance and social motivation with 3D sensors and artificial intelligence. DCM led the company’s $17 million Series A round in 2019.

“We had a good sense of what we were looking for in Tempo, and the first time we tried it, we had a ‘wow’ experience,” Lui said.

Mark Wan, Causeway Media Partners

Mark Wan is another VC who has tried many fitness apps and platforms along the way to investing in some of them. Causeway Media Partners, where Wan is managing partner, focuses on later-stage sports and fitness investments.

Two have been Zwift, an online fitness platform involving indoor cycling, and Freeletics, a digital fitness company that offers tools to help promote physical fitness and mental strength. Causeway invested in both companies last September: It led Freeletics’ $25 million Series B and was involved in Zwift’s $450 million Series C.

Wan sees pitches from between two and five companies in this space per month, and while he doesn’t try all of them, he is happy to test quite a few of them.

“I don’t want to use myself as a proxy for the market because I am a sample size of one, but I am curious to see what the experience is like: The style of workout, the intensity, the equipment, how easy it is to sign up and test the customer service,” Wan said. “With Zwift, we thought it was the best out there as far as cycling, had real scale and a great management team. Freeletics is one of the best out there that is a pure digital app, with scale and a great leadership team.”

What’s next

The fitness category is especially interesting right now as the global health club market nears $100 billion in value, Edwards said. She cited market research which found that while health club members have returned to those facilities or will once it becomes safe again, younger Americans are enjoying exercising at home and plan to continue.

All of the VCs who spoke with Crunchbase News for this article said that the keys to fitness apps and platforms succeeding is for them to fulfill their promises and motivate customers to use them on a regular basis.

Dagres said he’s tested products where the full body benefits were stellar, but it either was going to cause long-term stress to his body or it was so boring that he didn’t see himself doing it everyday.

“You have to have the efficacy, where if you say you will get the calorie burn from a 30-minute workout, you have to make that happen,” he added. “The other part is just as important, if not more, it has to be something people will do again and again. If not, it has no benefit.”

Illustration: Dom Guzman

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