NEOU, the startup that describes its app as the “Netflix of fitness”, has just raised US$5 million in investment from big Wall Street names including CEO of asset management firm Ares Management Mike Arougheti and president of Vista Credit Partners David Flannery. Like other home-based workout and fitness apps, NEOU is now benefiting from renewed interest as bets are on that the trend will last even as coronavirus eases.
The latest US$5 million round valued NEOU at around US$40 million, and takes its total funding raised to US$30 million. Other participating investors in the round include CEO of British audio brand Bowers & Wilkins Gregory Lee and co-founder of online grocery platform FreshDirect Jason Ackerman.
Founded in 2015, NEOU is named after the company’s goal to help users become a “new you”. It works much like online streaming platform Netflix in that it offers monthly and annual memberships for users to access unlimited fitness classes on up to 5 devices. The New York-based startup partners with brands in revenue-sharing and licensing agreements to put online classes on the app.
NEOU says that new capital will be used to expand its services to attract new customers, and is hoping to become profitable in the next 12 to 24 months – an achievement that many of the most highly-valued tech startups have yet to achieve, such as ride-hailing app Uber and music streaming giant Spotify.
Many at-home fitness providers have been benefiting from the stay-at-home orders and lockdown measures in place to stem the spread of the coronavirus. NEOU now has more than 50,000 paying customers across 65 countries globally. The startup
Popular workouts on the platform include “The Program”, led by video game company Take-Two Interactive’s CEO Strauss Zelnick, and the “Vixen Workout” that is based on dancing.
The company has struggled to make enough partnerships to film and create new content for the time being due to coronavirus work-from-home policies, but it has plans in place to return to studios as soon as this month, as the United States begins opening up its economy again.
Investors believe that even once quarantine is over, the home fitness trend will continue to grow in popularity. “I believe at-home fitness is a mega-trend in the wellness industry,” said Arougheti, who first invested in the company in 2017. “And NEOU will have tremendous value in the space as a first mover.”
It’s a global trend too. In China, the home exercise app Keep recently secured a whopping US$80 million in its latest Series E round, which lifted the startup to unicorn status.
But even prior to the pandemic, fitness apps had been steadily recording greater shows of support amongst consumers, with investors already mighty bullish on the business opportunity to be made. In January before the pandemic struck globally, ClassPass announced that it closed a Series E round with an astonishing US$285 million, which elevated it to unicorn status as well.
With the coronavirus pandemic likely to push health and fitness up on the priorities amongst mass consumers across the world, digital and home-friendly exercise solutions might just be here to stay in the long-run.
All images courtesy of NEOU.