Peloton raises $550 million to expand its connected fitness machines and virtual classes | Tech Industry
Peloton, a fitness technology company that sells exercise bikes with screens for on-demand virtual classes, is raising a whopping $550 million in a series F round of funding led by TCV, with participation from most of its existing investors including Kleiner Perkins, NBCUniversal, Tiger Global, True Ventures, Wellington Management, Fidelity (FMRCo), and Balyasny. New investors include Felix Capital, Winslow Capital, among others.
The round is scheduled to close in Q3 this year.
Founded in 2012, New York-based Peloton’s basic bike package weighs in at around $2,000, though there are additional packages available that include extras such as shoes, weights, headphones, and heart-rate monitors. The company has historically targeted the home-exercise brigade, but last year it introduced a commercial incarnation of the product aimed at hotels, gyms, hospitals, and so on.
Through the mounted display, users can access thousands of on-demand and live classes replete with remote instructors. Users must also sign up for a monthly subscription, starting at $20, that gives access to these classes, which includes running, walking, bootcamp, stretching, yoga, and strength training.
Prior to now, Peloton had raised around $450 million in funding, and with its latest cash injection it plans to fund its previously announced product expansion and global roll out.
Indeed, back in January Peloton announced plans to launch a $4,000 connected treadmill, which is scheduled to launch later this fall, while it’s also gearing up to launch its products in the U.K. and Canada — its first international markets.
Aside from its international expansion and push into new markets, Peloton is also preparing to open a new 25,000 square-foot campus in Texas which will serve as its customer support hub, as well as a new 35,000 square-foot production studio in Manhattan where it will create and broadcast its fitness classes.
The global health club industry generates around $83 billion annually, according to the International Health, Racquet & Sportsclub Association (IHRSA), with 162 million fitness fanatics visiting 200,000 gyms and leisure centers. And this is why venture capitalists have been pouring cash into fitness startups that promise a little more freedom to consumers to work out where and when they want.
Audio-based fitness app Aaptiv recently raised $22 million, which followed a $12 million round less than a year ago. And a few months back, stealth startup Mirror raised $13 million to serve up in-home workouts through connected mirrors. Yup.
“We look for companies that offer their consumers a great value proposition, have engaged and delighted customers, and are led by visionary CEOs who have built a world-class management team,” said TCV general partner Jay Hoag. “We found all of these characteristics in Peloton and look forward to working with John and the entire team on their journey to revolutionize the home fitness category.”
Hoag, who serves on the board at Netflix, Electronic Arts (EA), and Zillow, will also now join Peloton’s board of directors.