Hydrow, the maker of a $2,500 connected rowing machine, said Thursday it has secured another $55 million in funding to fuel its growth as the home fitness industry undergoes a process of change as consumers return to gyms after two years of Covid-related closures and restrictions.
The company said its Series D fourth round raises its total funding so far to more than $255 million.
Hydrow’s new funding comes in the form of pelotonPerhaps the most famous fitness maker in the world Cut thousands of jobs and cut costs across the business After growing too fast during the height covid-19 pandemic. Under new CEO Barry McCarthy, Peloton is looking to readjust its operations to align its operations with the slower levels of growth it will see as consumers leave their homes and return to the gyms.
Peloton shares are down nearly 80% in the past 12 months, trading below their initial public offering price of $29, casting a shadow over the rest of the industry, particularly players like Hydrow in the private market that have been looking to go public. .
According to Hydrow founder and CEO Bruce Smith, there is still tremendous room for growth, despite the headwinds Peloton and the industry are facing. He said the overall penetration rate in the overall addressable fitness related market is still less than 10% today.
“The work we’ve done around the whole market penetration — the pandemic has clearly accelerated penetration a little bit, but we don’t see any change in long-term trends,” Smith said, in a recent phone interview. “In fact, the pandemic will continue to accelerate demand because no one is going back to the office five days a week. It’s the same for fitness.”
“People are definitely going back to the gym,” Smith said. “We support that, and we’ll be in your gym in your apartment building. And your home. And that blended experience is the new normal going forward.”
last June, Bloomberg reported that Hydrow was exploring pursuing an initial public offering, or a merger with a special purpose acquisition firm, valued at more than $1 billion. By comparison, Peloton’s market capitalization has fallen to just over $7.9 billion, from a high of around $50 billion in early 2021.
Hydrow declined to comment on its current evaluation or plans to publish the works. However, Smith said a hit to the public markets is still a possibility.
“An essential part of being prepared to be a public company is predictability…that really rewards your assessment, and we’re focused on that,” he said. “Every time someone learns about canoeing, they choose Hydrow.”
Peloton is said to be working on its own rowing machine as it develops new products to increase sales, which could pull some future demand away from the Hydrow. Other rowing machine makers include the NordicTrack division of iFit Health and Fitness, CityRow and Ergatta.
Hydrow does not disclose its financials since it is not a publicly traded business, but it did say its revenue grew three times 2020 levels in 2021. It also said it has more than 200,000 users today.
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-only membership for $19.99 per month.
The data shows how much cardio equipment consumers have collected during the pandemic compared to pre-Covid levels, with many seeking to re-create some kind of gym experience at home.
Total sales of cardio equipment — including treadmills, stationary bikes, rowing machines, steps and ellipticals — totaled $1.5 billion in the United States in 2021, up 95% from 2019 levels but down 4% from 2020 levels, according to data tracked by the group. NPD. However, the NPD said treadmill sales grew 5% in 2021 compared to 2020.
Hydrow said it will use the new funding to help with marketing expenses and building a larger brand, as well as product innovation.
Led the Series D tour by the Massachusetts-based private equity firm Constitution Capital, along with investments from L Catterton, RX3 Ventures, Liberty Street, Activant Capital and Sandbridge Capital.
“The fact that Hydrow’s growth continues to accelerate as consumers have been able to return to the gym and fitness studios underscores the tailwind driving connected fitness in general, and Hydrow specifically,” said Michael Farello, managing partner at L Catterton.
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