Categories: Investments

Fitness Platform Raises $5M For Online Workouts

Looking beyond COVID-19, Wall Street is betting the at-home fitness boom will outlast the social distancing era.

Bloomberg News reported NEOU, the New York-based live streaming and on-demand platform for trainers, has raised $5 million in capital from investors including Ares Management Corp. CEO Mike Arougheti* and David Flannery, a former GSO senior managing director.

The round valued the company at about $40 million, NEOU CEO Nathan Forster told the news service.

“We’re the Netflix of fitness based on our user experience and affordability, and an Amazon to content creators, in that we are a marketplace that provides trainers with a way to digitally scale their businesses,” Forster said.

The company, whose name means a “new you” has raised $30 million since its founding 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 company will be profitable in the next year or two.

NEOU charges U.S. customers $14.99 a month or $49.99 a year, according to its website, for access to more than 3,000 fitness classes. The firm boasts more than 50,000 customers in 65 countries, the news service reported.

The electronic DJ Steve Aoki, a wellness advocate with 6.5 million followers on social media, and Nicole Mejia, a fitness instructor with 1.3 million followers and 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 New York American video game company Take-Two Interactive Software Inc.’s CEO Strauss Zelnick, and the dance-based Vixen workout, a dance fitness brand focused on improving the physical and mental wellness of women.

“I believe at-home fitness is a mega-trend in the wellness industry,” said Ares Management Corp.'s Arougheti, who first invested in the company in 2017, told Bloomberg. “And NEOU will have tremendous value in the space as a first mover.”

While gyms have been closed and memberships have shrunk, many have shifted their services online, as previously reported in this space.

Ryon Packer, chief product officer at fitness industry-focused payment and club membership management software provider ABC Financial, told PYMNTS gyms can no longer be brick-and-mortar destinations.

Online classes “allow the club to extend 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 from the company itself.)

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