The Hottest Investment Space In The World

Growth within digital fitness has accelerated throughout the pandemic, but don't expect things to return to normalcy anytime soon.

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Friends,

It feels like every week since the pandemic started we’ve discussed a digital fitness application raising money and officially entering unicorn status.

This week is no different.

Strava, a San Francisco based social network for athletes, is profitable and looking to raise between $150 million and $400 million. The deal would value their existing technology and 70 million plus user base at over $1 billion — tripling their valuation from $365 million just three years ago.

Growth Overview:

  • +20M members, up 40% since January

  • 3.4M downloads in May, up 179% from January

  • $6.4M revenue in May, up 166% from January

Strava is built on a free interface, which allows users to track their physical activity (cycling & running) while interacting and competing with friends.

More recently, Strava introduced a new $5 / monthly premium subscription model — they plan to double down and supercharge their growth by increasing their marketing, advertisement, and platform budget.

Strava

(Source / FOS)

As the pandemic has brought economic uncertainty to both consumers and commercial retailers alike, we’ve continued to see an aggressive acceleration within the digital fitness space.

The most interesting part?

You shouldn’t expect the trend to reverse when consumers return to work.

It’s become obvious — through unique integration of content, hardware, social, and technology, the world of fitness has changed forever.

We’re seeing a combination of institutional investors not wanting to miss the next big opportunity (think Peloton), digital fitness platforms taking advantage of momentum, and archaic fitness companies urgently attempting to pivot their business model before it’s too late.

Check out how much money has been pumped into digital fitness in just the last couple months.

Digital fitness, which has traditionally been an investment space reserved for boutique and forward-thinking firms, has seen increased capital from large private equity investors like L Catterton, The Blackstone Group, and KKR.

Specifically, L Catterton has continued to build out an impressive portfolio within the space — signifying their continued bullish optimism in recent trends.

Investments include:

  • Peloton

  • Tonal

  • Hydrow

  • ICON (iFit & NordicTrack)

In addition to increased involvement from some of the largest private equity firms in the world, the pandemic has also allowed traditional sports retailers like Nike and Under Armour to step back, look under the hood, and make necessary changes to non-efficient parts of their business.

For instance, Nike has spent the last few months laser focused on digital sales — which have now accelerated past their 2023 projections.

Under Armour, in addition to scraping plans on an NYC flagship store, used the time to claw back previously committed capital through sponsorship deals with schools like Cal and UCLA — which they believe can provide a higher ROI through digital channels.

Point being — history has continuously shown us that the most successful companies in the world spot trends, move quickly, build a moat, and accelerate their growth.

If you can’t do that?

You better have the courage and conviction to admit you’re wrong, pivot quickly, and proceed forward with speed.

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