ClassPass has muscled its way into the $1 billion startup club.
The alternative gym and fitness studio startup said Wednesday that it has raised $285 million in new funding, pushing its valuation above the $1 billion mark, officially making it a “unicorn.”
Launched in 2013, ClassPass made a name for itself by helping boutique studios and gyms fill empty slots in classes. Over the years, it has experienced some growing pains with its business model, switching from an unlimited plan to a tiered membership model and later changing again to a credit-based system in 2018. But in the past 18 months, the company has been on an expansion tear, going from four to 28 countries. It now boasts more than 30,000 boutique studio, gym and wellness partners.
ClassPass CEO Fritz Lanman told CNN Business that the startup began fundraising for its latest round in September, the same month that elite fitness brand Peloton (PTON) made its lackluster Wall Street debut. The indoor fitness company was just one of a stampede of unprofitable consumer startups that made their Wall Street debuts last year; their struggles on the public market have collectively shifted investor appetite to favor sustainable businesses.
Lanman touted the new investment as helping put the company on the path towards going public – eventually. “First order is to build a healthy, global sustainable business, and we’re doing that,” he said.
ClassPass declined to comment on whether it is profitable.
While ClassPass does not have any imminent plans to go public, nor any timing forecasts to share, Lanman said “the goal is to stay independent.”
The funding, which had been rumored late last year, will be used to further fuel its expansion abroad and be put towards growing its corporate partnership program, which counts about 1,000 businesses that provide ClassPass memberships to employees as a perk.
The investment was led by Apax Digital and L Catterton, an investor in popular fitness brands including Peloton, digital strength training startup Tonal, Pure Barre and Equinox.
Payal Kadakia, founder and executive chairman of ClassPass, told CNN Business that the growing ecosystem of fitness brands, including the at-home fitness craze, is good for everyone. “It is motivating for people to try different experiences; our stats keep pointing to variety – if one of those mixes of variety is at-home, that’s fine,” she said. (ClassPass offers at-home audio and video workouts for members to access free of charge.)
Lanman similarly noted that a broader “trend where people are spending more and more money on health and wellness” is a positive signal.
According to data provided by analytics firm Second Measure, which looks at anonymized credit card and debit purchases, ClassPass sales in the United States have been growing over the past two years. For example, in the most recent month of November 2019, its US sales were up 26% from a year earlier.