For those who enjoy fitness classes or mixing up their routine to discover new classes, ClassPass is the ultimate solution. ClassPass is the flexible, wellness membership that gives members access to 30,000 boutique studios, gym, and wellness facilities. Available in 28 countries, ClassPass has quickly become the primary way that fitness facilities attract new clients and fill spots in off-peak times. Even Rumble, the fast-growing, high-end boxing chain, is available now on ClassPass. Consumers can fully customize their ClassPass membership to buy credits (which are used to pay for classes) to optimize the best workout regimen and unused credits easily roll over to the next month. Companies including Glossier, Morgan Stanley, and Google are turning to ClassPass to provide robust, employee wellness programs.
AlleyWatch sat down with ClassPass CEO Fritz Lanman to learn more about the company’s future plans, growth, and latest funding which brings the total funding raised to $549M across nine rounds.
Who were your investors and how much did you raise?
On the heels of our expansion into nearly 30 countries and the signing of more than 1,000 leading employers onto our corporate wellness program, ClassPass has raised a $285M Series E. The round was led by L Catterton and Apax Digital, with additional participation by existing investor Temasek.
Tell us about the product or service that ClassPass offers.
ClassPass is the most world’s flexible fitness and wellness membership. One ClassPass membership gives you access to 30,000 boutique studios, gyms and wellness providers across five continents.
What inspired the start of ClassPass?
The idea for ClassPass started in 2010 when founder Payal Kadakia was unsuccessful in booking a dance class. She spent over three hours calling different studios and combing through different websites, each with different prices, schedules, levels, and package types. The process was so frustrating that she never actually booked a class. She realized that this challenge was also an opportunity. It’s hard enough to get most people to work out. Once you add in the friction associated with trying to discover and book classes, most people will never make it through a gym or studio door. Payal made it her mission to create a seamless, motivating platform that would help more people get active. ClassPass is now the world’s most flexible fitness and wellness membership. One membership gives you access to 30,000 boutique studios, gyms, and wellness providers worldwide.
How is ClassPass different?
On the consumer side, we are the leading fitness and wellness provider. There is no gym membership with a larger global network. We provide maximum flexibility and motivating variety in your workouts.
On the studio side, we pioneered technology that helps our studio partners generate millions in additional revenue through improved yield optimization. We are the only aggregator that offers this technology, and we consistently hear from our partners that we are their biggest source of third-party reservation revenue.
On the corporate side, we are the most employer-friendly corporate wellness program in the market. We only charge for active employees (not eligible employees), we customize every plan, and our large network of studios means everyone can benefit, even remote employees and those who travel for business.
What market does ClassPass target and how big is it?
We target adults looking for easy, motivating ways to stay active. ClassPass works for everyone, because of the range of classes, workouts and wellness experiences offered. For those hoping to hustle, there are boot camps, TRX sessions, and HIIT classes. For those hoping to invest in self-care, we offer massages and meditation classes, bookable through the app.
What’s your business model?
Our credits model has enabled us to expand rapidly, from 4 to 28 countries in 18 months, and to find a model that benefits our partners, customers, and ClassPass all at the same time.
ClassPass members purchase a pack of monthly credits that they can redeem towards fitness classes, gym and pool time, and wellness experiences such as meditation classes and massages. The packages are completely customizable, and members can update their plans monthly as their goals and needs evolve. Using the credits system, we are able to dynamically price our classes. Small studios at off-peak times tend to be fewer credits than nationally recognized brands at peak times. Members have complete flexibility in how they use their credits, and we allow unused credits to roll over for the following month!
What was the funding process like?
We started fundraising in the fall and closed right at the start of the new decade. L Catterton has deep experience working with leading fitness brands, including tech-enabled brands such as Peloton, Hydrow, and Tonal, as well as studio and fitness club brands, including Xponential Fitness, Equinox Holdings, Pure Barre, CorePower Yoga, Will’s Gyms (China), and BodyTech (Latin America). Apax has significant experience helping digital marketplace and consumer subscription businesses scale globally. Temasek is a partner investing in their third round, and we have had a great historical partnership with them.
As part of the investment, Marc Magliacano, Managing Partner at L Catterton’s Flagship Fund, and Daniel O’Keefe, Managing Partner at Apax Digital, will join the ClassPass Board of Directors. We are thrilled to welcome these new board members who possess incredible domain expertise in digital subscription businesses and the fitness industry more broadly, and who are experts at what we are trying to achieve.
What are the biggest challenges that you faced while raising capital?
We were lucky to have a lot of interest during this round. The biggest challenge was deciding which investors to partner with, and I am thrilled that APAX and L Catterton are now part of our adventure.
What factors about your business led your investors to write the check?
In 18 months, we were able to scale from 4 to 28 countries, and even in our recently launched European markets, our partners consistently tell us that we are the #1 driver of new customer reservations. In addition, our corporate wellness program has signed on over 1,000 leading employers in just two years, including Facebook, Google, Morgan Stanley, Glossier, and many other global brands.
We are the #1 driver of new customer reservations. In addition, our corporate wellness program has signed on over 1,000 leading employers in just two years, including Facebook, Google, Morgan Stanley, Glossier, and many other global brands.
Our track record, growth rate, unit economics, market share, and reputation – along with the secular growth in the category and obvious need for an aggregator – made us a compelling bet for these amazing investors.
What are the milestones you plan to achieve in the next six months?
This investment will allow ClassPass to more rapidly expand within existing geographies, including Europe and South America, add more countries to our network, and scale our corporate program globally. Particularly in Europe, where we have become the leader in several markets in just a few months, we want to continue to invest and grow our position as the #1 fitness and wellness aggregator.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Before worrying about raising money, focus 100% of your energy on solving a real problem for customers. If you achieve true product-market fit, the growth and business model will emerge, and there is so much capital in the world that it will find you.
If you do have to raise money to start solving the problem, raise as little as possible and go with angel investors. Look for people who know they are taking a risk, and who can be helpful as advisors throughout the process.
Where do you see the company going now over the near term?
ClassPass is going to keep growing both domestically and internationally. We will double our corporate partners, keep opening new LATAM and Europe markets, and bring even more wellness options onto the platform.
Does your family have a favorite workout class that you all do together?
My daughter is 4 years old and we live in Montana, so our family activities mostly revolve around skiing, hiking, and rafting. My wife and I both do a lot of classes, but she does more pilates, yoga, and spin, and I prefer HIIT, lifting and circuit training. We recently brought the national chain Rumble’s 12 locations onto ClassPass, and that’s definitely my favorite NYC workout this month!
We recently brought the national chain Rumble’s 12 locations onto ClassPass, and that’s definitely my favorite NYC workout this month!
What’s your favorite restaurant in the city?
Lucien on 1st and 1st by far. It’s a cozy little French bistro with great owners and everything on the menu is fantastic – especially the steak frites. There’s a long wait for a table but it’s worth it.
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