Investing in the Personal Fitness Industry
August 19, 2020
Over the years, I’ve come to view the gym as something of a sanctuary. After a long day at the office, it always feels liberating to lift some weights, take a spin class, or go for a run.
But like many fitness enthusiasts, my daily workout routine changed drastically in mid-March, when gyms and workout facilities across much of the country were ordered to close amid COVID-19 stay-at-home orders. For the most part, gyms—which make up a $30 billion annual industry in the US—have remained shuttered, and individuals have been forced to devise new ways to get their daily workouts.
With thousands of gyms around the country closed for the indefinite future, there exists a significant opportunity to disrupt the personal fitness industry. As an investor, I’ve always been an advocate for creative destruction—the process of discovering innovative, new ventures that revolutionize and inexorably change well-established markets. As consumers increasingly turn to personal exercise equipment and supplements as substitutes for traditional gym experiences, aspiring investors should consider how they can enter this burgeoning new market.
From fitness tech to nutrition products, these case studies will help aspiring venture capitalists think critically about where to seek innovative opportunities in this new vertical.
I’ve always maintained that effective investors should look for ways to revolutionize and existing markets—and that’s exactly the effect that the proliferation of tech has had on the fitness industry over the last decade.
Take Peloton, for example. Stationary bikes are nothing new—they have been a gym staple for decades. But Peloton has devised a way to marry this time-honored piece of equipment with the latest technology. Pairing their stationary bikes with Wi-Fi and LED monitors, Peloton offers hundreds of live-streamed fitness classes in which users can interface with trainers and compete with other athletes from around the world—all without having to leave their homes.
This model propelled the company to a nearly $1 billion revenue haul in 2019.
Peloton—literally speaking—did not have to reinvent the wheel to achieve such success, it merely had to reformulate an extant product for a changing market. I advise investors to look for firms that integrate up-to-date tech into fitness products that can easily and efficiently be deployed from home.
Proper nutrition is essential to staying fit, and as Americans increasingly turn to exercise as a method to cure quarantine boredom, demand for high-quality nutrition products will almost certainly increase.
Aspiring venture capitalists should consider ways to tailor this demand to better meet the preferences of young people, an especially health-conscious cohort that generally avoids products high in sugar, carbs, and fat. Ventures that makes inroads with Millennials and Gen Z—the consumers of the future—could well be the firms that will define the direction of the economy in ten or twenty years.
With this in mind, I invested in TuMe Water a couple of years ago. TuMe offers a range of hydration products that inject turmeric into water, offering consumers an easy, appealing way to incorporate the herb into their daily diets.
Venture capitalists should look for similar opportunities that leverage the ever-growing demand for post-workout refueling products and nascent consumption trends to develop a winning product.
With the protracted closure of gyms, many Americans have taken matters into their own hands, purchasing weights, bench presses, and even Pelotons for their own personal gyms. But many taking this approach have run into a similar problem—space.
Those who live in high-density, urban areas often lack the requisite square footage in their apartments or condos to store their home gym equipment. This often becomes a limiting factor.
Aspiring investors should seek out about strategic ventures aimed at mitigating this issue. With myriad new technologies at hand and a corresponding demand now sweeping the country, innovative entrepreneurs will likely seek out high-quality models to store equipment and maximize exercise space. Will you be there to help?