Munich-based smart fitness startup EGYM raises $225 million from Jared Kushner’s Affinity Partners

Image credits: EGYM under license.

The tech industry in general may not be in the best of health at the moment, but health and fitness startups appear to be alive and well. EGYM, the Munich-based smart training solutions company, has agreed a monster equity investment of 207 million ($225 million), on the back of a very strong growth year led by the investment firm started by Jared Kushner.

The company’s business includes both a line of connected hardware (its own gym equipment); software (apps and diagnostics to measure and optimize how people train on EGYM and other connected fitness equipment); a corporate healthcare network operation called Wellpass with more than 2.5 million users; and a mission: to improve healthcare outcomes by focusing on the shared economy of a gym, in the words of CEO and co-founder Philipp Roesch-Schlanderer.

Ninety-nine percent of the market is remedial over prevention, he said of the healthcare approach and its focus on chronic conditions treated with drugs and related therapies, an approach he believes would be less likely and less costly if people exercised and treated their bodies better. We want to move it.

You can argue that this is a gross oversimplification of the state of the global healthcare market today, but you could argue less with EGYM’s numbers.

The company had revenues of $130 million in 2022, growing 70% year over year. Wellpass, a big goal for the company going forward, grew 100% over the same period. En route to a future IPO, it expects to double in newer markets like the US and become profitable by doubling overall revenues to $260 million in 2023.

And in a tough year for fundraising, when investor attention seems to be focused primarily on AI startups, the EGYM round is one of the biggest to come out of Europe.

All the more interesting, then, when considering the lead investor. Affinity Partners, the Saudi-backed Florida-based investment firm founded by former US President Donald Trump’s son-in-law and close confidant, leads the round, with former stalwarts Mayfair Equity Partners and Bayern Kapital also participating . This is a Series F, and EGYM said about half of it, 107 million, will flow immediately with the remaining 100 million on the table for future use.

The first tranche comes at a post-money valuation of 600 million. Based on the company’s growth rate, which is currently at 70% year-over-year for the entire business, Roesch-Schlanderer said that when the second tranche is raised, it will likely be at a higher valuation.

EGYM’s current flow period comes after nearly 14 years in business, it was founded in 2010 and was close to going bankrupt during Covid when all gym activities stopped. And the idea had a very classic beginning: he came to Roesch-Schlanderer to solve his own problem; specifically, his failures when it came to exercise.

It all started with me unsuccessfully hitting the gym, she said in an interview, explaining that typically while people are shown how to use the range of machines in their gyms, they are largely left to their own devices afterward. I tried to understand why I and so many others can’t work well there.

Roesch-Schlanderer, who studied entrepreneurship and technology management in college, predictably saw a business opportunity in that question that could be answered with technology.

I realized that those who work well either have trainers or have a background in exercise science, she said. So we decided that we could make the gym work if we gave each user an AI-powered trainer.

And that is, indeed, the long-term goal of the company.

The business started out very focused on their own hardware along with baseline usage measurements based on people exercising on EGYM’s equipment. Over time, the company slowly incorporated more sophisticated technologies into the mix and made the software work with other equipment. The AI-powered personal trainer he talks about has yet to be implemented, although more machine learning has been incorporated into the product on the road to more customization.

We think we will perfect it in the next two years, said Roesch-Schlanderer of the AI ​​service.

This has also changed the composition of the business: today the gym hardware/equipment portion of the business remains an incredibly large part of the EGYM business, but it also now accounts for only 25% of the company’s revenues.

At a time when consumer-centric fitness businesses have suffered a series of Peloton bumps and its recall of 2 million bikes in May was the most recent hiccup, it is interesting to note that EGYM was set up as a B2B operation: gyms of all sizes, rather than individual users, have always been its target customers and to date there are around 16,000 using EGYMs products.

In recent years, with the launch and growth of Wellpass, which has extended to building business relationships with companies and others who offer their employees health and wellness benefits, with approximately 11,500 of those who use EGYM products are part of the Wellpass network. (In that note, Roesch-Schlanderer said she doesn’t view Affinity as a strategic investor: There have thus far been no conversations to bring in the Trump Organization or its various resort properties as clients.)

While fundraising has generally been in the tech sector over the past year, one of the bright spots appears to have been health care, and specifically companies building services around the preventive care theme, using technology to improve the traditional way of doing things.

Earlier today, Neko Health, co-founded by Spotify’s Daniel Ek, announced a $65 million round for its full-body AI scan with the promise/ambition to find problems and optimize treatments before potential ones problems become health problems. Last week, Augmedics raised more than $80 million for a new take on spinal surgery that aims to be less invasive and more accurate thanks to AR and artificial intelligence. We’ve also seen a wave of tech insurance startups trying to tap into this concept by providing corporate clients with wellness and fitness services to help people stay healthy and avoid the more expensive medical routes they end up taking when they don’t. I am.

EGYM serves large, fast-growing global fitness and healthcare markets with a differentiated technology-focused model, he said
Asad Naqvi, partner at Affinity Partners, in a statement. It’s not often we come across companies with revenues in the triple-digit millions that are close to doubling year over year. At EGYM, we back an incredible team with a long track record of successful execution and look forward to supporting the company on its journey to an IPO.