Fitness platform raises $5 million for online workouts
Beyond COVID-19, Wall Street is betting the home fitness boom will survive the age of social distancing.
Bloomberg News reported NEWthe New York-based live and on-demand streaming platform for trainers, raised $5 million in capital from investors including the CEO of Ares Management Corp. Mike Arougheti* and David Flannery, former GSO Senior Managing Director.
The round valued the company at around $40 million, NEOU CEO Nathan Forster told the news service.
“We are the Netflix of fitness based on our user experience and affordability, and an Amazon for content creators, in that we are a marketplace that provides a way for trainers to digitally scale their businesses,” said Forster.
The company, whose name means “new you”, has raised $30 million since its inception five years ago. Existing investors including Bowers & Wilkins CEO Gregory Lee and Fresh Direct LLC co-founder Jason Ackerman.
The new funds will be used to attract new customers, Forster said, and he hopes the business will be profitable within the next year or two.
NEOU charges US customers $14.99 per month or $49.99 per year, according to its website, to access more than 3,000 fitness classes. The company has more than 50,000 customers in 65 countries, the news service reported.
Electronic DJ Steve Aoki, a wellness advocate with 6.5 million social media followers, and Nicole Mejia, a fitness instructor with 1.3 million followers whose live classes sell out in 30 seconds , use the workspace and are instructors who create their own content.
Bloomberg said NEOU’s popular workouts include “The Program,” often led by the CEO of American video game company Take-Two Interactive Software Inc. Strauss Zelnick, and the dance-based workout Vixen, a brand of dance fitness focused on improving the physical and mental well-being of women.
“I think home fitness is a megatrend in the wellness industry,” Arougheti of Ares Management Corp., which first invested in the company in 2017, told Bloomberg. “And NEOU will have enormous value in the space as a first actor.”
As gyms have been closed and memberships dwindled, many have moved their services online, as discussed earlier in this space.
Ryon Packer, chief product officer at ABC Financial, a provider of payment and membership management software focused on the fitness industry, said PYMNTS gyms can no longer be physical destinations.
Online classes “allow the club to expand into members’ living rooms or hotel rooms,” Packer said.
(*Editor’s Note: An earlier version of this article incorrectly stated that Ares Management Corp. invested in NEOU, but the investment came from the company’s CEO on his own behalf rather than the company itself. .)