Getting healthy is big business these days, and now a startup with a unique approach to using technology to help people get more active is announcing a major funding round and ramping up its growth.
Munich-based EGYM, a maker of connected fitness equipment and personalized training technology that is also building a fitness marketplace between gyms and corporate wellness programs, has closed a $200 million-plus Series G round from L Catterton and Meritech, new backers of the startup.
In an interview with TechCrunch, CEO and founder Philippe Roche-Schlander confirmed that the company is valued at more than $1.2 billion after the funding, and that the funding will be used in a few key areas. The company is looking to further expand in new markets, the UK and the US, where it has acquired two smaller companies, Hussle and FitReserve, respectively. It also wants to continue developing Genius, the AI-based assistant it unveiled earlier this year. Despite all the hype around AI, Genius is not just an AI gadget, Roche-Schlander said.
“I don’t have a particular opinion on the whole AI world, but I can say that in our field, AI adds a lot of value by helping people always have the best workout at their fingertips based on their past successes, behavior and goals,” he said, adding that only around 10 percent of gym-goers have access to a personal trainer, making an AI trainer a viable alternative.
Roche Schlanderer founded EGYM out of his own dissatisfaction with gyms and training.
Around the world, about 200 million people stay healthy by working out at the gym. Roche Schlander also wanted to get healthy, but he found himself stuck. If you don’t go to the gym regularly, you might not know where to start. And even if you do, there isn’t much data on what to do better or how to change things to avoid injury.
With these gaps in mind, EGYM built a series of connected workout stations that help track user behavior. With the help of an app, EGYM’s equipment tracks user activity, and data from wearable devices tracks wherever you sweat. Initially, EGYM contracted with gyms to sell their equipment, and then built corporate wellness plans to get employees to use the equipment. This entire model is based on B2B2C, and no plans have been developed to sell directly to consumers.
The formula has been a big success: Roche-Schlander said the company is profitable on an EBITDA basis and expects to generate $500 million in revenue by 2025.
The company said today that its corporate network business, Wellpath, has 17,000 sports partners (i.e. gyms), 14,000 corporate clients, and 3 million “eligible” employees. (For comparison, Wellpath had 2.5 million users when EGYM last raised capital (July 2023, $225 million). Overall, about 18,000 fitness and health centers use EGYM’s machines and services, and about 6 million people use EGYM’s products monthly. Currently, about 75% of the business is subscription-based, with the remaining 25% focused on equipment, he said. “The corporate subscription market is bigger than gym tech, but it’s gym tech that creates the value,” Roesch-Schlander said.
Roche-Schlanderer is joining a growing trend: The world is increasingly leaning toward preventive medicine, looking for better ways to identify what might go wrong and what to do to avoid it before it’s too late and your options narrow down to a combination of drugs, surgeries and expensive doctor’s visits.
Companies like Neko Health, a startup co-founded by Daniel Ek, are building clinics that scan customers’ bodies and combine that with AI algorithms to provide a range of health diagnostics for users, giving consumers a better view of their health. Others are exploring what role the microbiome might play in managing their health. Fitness is becoming a core part of their proposition.
Still, the size of this investment is notable given that Europe continues to see a shortage of growth rounds, especially for non-AI-focused companies.
EGYM’s AI efforts, launched earlier this year, are still new and ongoing. When asked which models it uses, the company responded: “EGYM Genius is based on a set of machine learning models that are tailored to the specific problems in the training domain. Thus, Genius is not based on large, large-scale language models, but on a set of models that are specifically tuned and trained based on years of training data collected by EGYM. This allows us to combine the power of deep learning models with the benefits of other machine learning methods, such as higher explainability than LLMs.”
Roche-Schlanderer said she was actively approached about participating in the next round shortly after the last one was announced.
“We had the capital to survive another COVID-19 pandemic,” he told TechCrunch, noting that the pandemic nearly bankrupted his company, so being able to survive another COVID-19 pandemic meant a lot to him.
But with all the interest, he decided to use the opportunity to find his “dream investor.” Taking a page from Jeff Bezos’ fundraising technique, he says, “I decided to get the right investors behind my mission: to double down on our growth while taking on some of the risk of using AI.”
Paul Madera, co-founder and partner at Meritech, and Marc Magliacano, managing partner at L Catterton, will both join the company’s board of directors as part of this round.
