Nine months after announcing its $60 million Series B round, home fitness system Tempo is back, this time with $220 million in a Series C round of funding.
“At the Series B, we were just starting to shop 10,000 units, so we were scrambling to get logistics and supply chain, and we had very few employees,” Moawia Eldeeb, co-founder and CEO of Tempo, told Crunchbase News. “COVID wasn’t the easiest time to handle growth for the first time, but we grew 10x in that year and had zero subscription cancellation.”
SoftBank Vision Fund 2 led the Series C round and was joined by new investor STEADFAST Capital Ventures, as well as returning investors DCM, General Catalyst, Norwest Venture Partners and Bling Capital. This brings Tempo’s funding to nearly $300 million since the company was founded in 2015, according to Crunchbase data.
The San Francisco-based company uses advanced 3D sensors and artificial intelligence to analyze users’ motion to provide a personal training experience. Its 42-inch HD touchscreen interface analyzes motion, provides real-time rep counting and feedback on form, as well as weight recommendations during live classes led by expert trainers.
The Tempo Studio is available for purchase on the company’s website, starting at $2,495, with financing available, and the $39 per month household membership includes live and on-demand fitness classes. Tempo also sells from BestBuy.com and will be in Best Buy retail stores nationwide this fall, Eldeeb said.
Inside the investment
Unlike previous rounds, backers approached Tempo this time, he said.
“Investors were telling us that they had a Tempo and have tried them all and knew Tempo was going to be a winner and wanted to be into it now,” Eldeeb added. “It ended up fast-tracking our fundraising by a year.”
DCM Partner Kyle Lui said in an interview that investors are out there with capital and in search of great technology investments like Tempo. There was so much interest that the round was oversubscribed, and Tempo could have raised more, he added. However, he believes the $220 million is the right amount to get the company to the next phase.
Earlier this year, Lui was one of a handful of venture capitalists that discussed the fitness apps he tested out before investing — Tempo was one of his choices, of course. But, while he believes Tempo is the best product in the home fitness space, it is not a “winner take all” market.
“There are folks who prefer what they prefer, and the customers using Tempo really love it,” Lui said. “Are folks going back to the gym? It depends on the person. When you have to drive to the parking lot, find parking and schedule classes ahead of time, it is a lot of friction. Is it enjoyable? Yes, but does that mean go back to what they were doing? I don’t think so.”
Indeed, there will be room for all: A recent McKinsey study found that 68 percent of people who worked out at home during the global pandemic plan to stick with it.
The global home fitness equipment market is expected to reach $8.62 billion by 2023 from $6.76 billion in 2019, according to ResearchAndMarkets.com. Last month, Tempo competitor and connected personal training platform Tonal raised $250 million in Series E funding to value the company at $1.6 billion.
Meanwhile, Tempo intends to use its new funding on technology development and additional content, such as introducing yoga and adding cardio-boxing. It also launched new hardware, including an adjustable kettlebell system, folding squat rack, weight plate storage and a folding bench.
“If you go to a Tier 1 gym, the best trainer will have 270 hours of experience and charge over $150 an hour,” Eldeeb said. “Tempo has 40,000 hours of training in the system and has trained on more than 5 million workouts. You will get the best recommendations, compared to a trainer, such as how deep to go in a squat, for a more effective, safe and efficient workout.”
Feature photo courtesy of Tempo.
Blogroll illustration: Li-Anne Dias