Hydrow, the $2,500 connected rowing machine maker, said Thursday it has secured another $55 million in funding to fuel its growth as the home fitness industry is in upheaval as consumers return to gyms after two years of lockdowns and restrictions related to Covid.
The Series D round has total funding in excess of $255 million to date, the company said.
The new funding for Hydrow comes as Peloton, arguably the world’s most famous fitness provider, is cutting thousands of jobs and cutting costs across the business after growing too fast in the midst of the Covid-19 pandemic. Under new CEO Barry McCarthy, Peloton is looking to reset its operations to bring its operations in line with the slower levels of growth it will see as consumers leave their homes and return to the gyms.
Peloton shares have fallen nearly 80% in the past 12 months, trading below the $29 IPO price, which has cast a shadow over the rest of the industry, especially private market players like Hydrow who have been looking to go public.
However, according to Hydrow founder and CEO Bruce Smith, there is still huge room for growth despite the hurdles Peloton and the industry are facing. He said overall connected fitness penetration relative to the total addressable market remains below 10% today.
“The work we’ve done on overall market penetration — it’s quite clear that the pandemic has accelerated penetration a bit, but we don’t see any change in long-term trends,” Smith said in a recent phone call. survey. “In fact, the pandemic will continue to increase demand because no one will be returning to the office five days a week. It’s the same with fitness.”
“People are definitely coming back to the gym,” Smith said. “We support it and we are going to be at your gym in your apartment building. And in your house. And this hybrid experience is the new normal for the future.”
Last June, Bloomberg reported that Hydrow was considering an initial public offering or merger with a special purpose acquisition company valued at over $1 billion. By comparison, Peloton’s market capitalization has fallen to just over $7.9 billion from a high of $50 billion at the start of 2021.
Hydrow declined to comment on its current valuation or its plans to go public. Smith, however, said public markets are still in the pipeline.
“A key part of preparing for a public company is being able to predict… that’s really what rewards your valuation, and that’s what we’re focused on,” he said. “Every time someone learns about rowing, they choose Hydrow.”
Peloton is said to be working on its own rowing machine, developing new products to boost sales, which could reduce future demand for the Hydrow. Other rowing machine manufacturers include the NordicTrack, CityRow, and Ergatta divisions of iFit Health and Fitness.
Hydrow does not disclose its financials as it is not a public business, but said its revenue tripled in 2021 from 2020 levels. The company also said that today it has more than 200,000 users.
People who already own a Hydrow rowing machine can pay an additional $38 per month to access the company’s live and on-demand classes. Hydrow also offers a digital membership for $19.99 per month.
The data shows how much more cardio equipment consumers purchased during the pandemic compared to pre-pandemic levels as many sought to recreate some kind of gym experience at home.
Cardio equipment sales including treadmills, exercise bikes, rowing machines, steppers and elliptical trainers were $1.5 billion in 2021 in the US, up 95% from 2019 levels but down 4% from 2020 levels of the year. This is evidenced by data tracked by The NPD Group. However, treadmill sales are up 5% in 2021 compared to 2020, according to NPD.
Hydrow said it will use the new funding to help with marketing spending and building a bigger brand, as well as product innovation.
Series D round was held Massachusetts-based private equity firm Construction Capital, as well as investments from L Catterton, RX3 Ventures, Liberty Street, Activant Capital and Sandbridge Capital.
“The fact that Hydrow’s growth has continued to accelerate as consumers have been able to return to the gym and fitness studios highlights the tailwind driving connected fitness in general and Hydrow in particular,” said Michael Farello, Managing Partner at L Catterton.