Hydrow, 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 takes a jolt as consumers return to gyms. after two years of Covid-related closures and restrictions.
The Series D round brings its total funding to date to more than $255 million, the company said.
The new funding for Hydrow comes as platoonperhaps the world’s most recognized creator of connected fitness, is eliminate thousands of jobs and reduce costs across the company after growing too fast during the height of the COVID-19 pandemic. Under new CEO Barry McCarthy, Peloton is looking to restart to bring its operations in line with the slower levels of growth it will see as consumers leave their homes and return to gyms.
Peloton shares are down nearly 80% in the past 12 months, trading below their $29 IPO price, casting a shadow over the rest of the industry, particularly players like Hydrow in the private market. who have been looking to go public.
However, according to Hydrow founder and CEO Bruce Smith, there is still a lot of room for growth, despite the obstacles facing Peloton and the industry. He said the overall connected fitness penetration relative to the total addressable market remains below 10% today.
“The work we’ve done around total market penetration is very clear that the pandemic has accelerated penetration a little bit, but we don’t see any change in long-term trends,” Smith said, in a recent phone call. interview. “In reality, the pandemic will continue to accelerate demand because no one will be going back to the office five days a week. The same goes for fitness.”
“People are absolutely coming back to the gym,” Smith said. “We support that, and we’ll be in your gym in your apartment building. And in your home. And that hybrid experience is the new normal going forward.”
Last June, Bloomberg reported that Hydrow was exploring the possibility of holding an initial public offering., or merge with a special purpose acquisition company, with a valuation of more than $1 billion. Peloton’s market capitalization, by way of comparison, has slumped to just over $7.9 billion, from a high of about $50 billion in early 2021.
Hydrow declined to comment on its current valuation or its plans to take the deal public. Smith, however, said reaching public markets is still in the cards.
“A key part of preparing to go public is the ability to forecast … that’s really what rewards your valuation, and we’re focused on that,” he said. “Whenever someone learns to row, they choose Hydrow.”
Peloton is said to be working on its own rowing machine as it develops new products to boost sales, which could shift some future demand away from Hydrow. Other manufacturers of rowing machines include the NordicTrack division of iFit Health and Fitness, CityRow, and Ergatta.
Hydrow does not disclose its financials as it is not a publicly traded company, but said its revenue grew three times from 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 more cardio equipment consumers picked up during the pandemic compared to pre-Covid levels, as many sought to recreate some kind of gym experience at home.
Sales of cardiovascular equipment, including treadmills, stationary bikes, rowing machines, stair climbers, and ellipticals, totaled $1.5 billion in the United States in 2021, growing 95% from 2019 levels but falling 4% from 2020 levels. That’s according to data tracked by The NPD Group. However, treadmill sales grew 5% in 2021 compared to 2020, NPD said.
Hydrow said it will use the new funding to help with marketing expenses and building a larger brand, as well as product innovation.
The Series D round was led by Massachusetts-based private equity firm Constitution Capital, along with investments from L Catterton, RX3 Growth Partners, Liberty Street, Activant Capital and Sandbridge Capital.
“The fact that Hydrow’s growth continued to accelerate as consumers were able to return to the gym and fitness studios underscores the tailwinds driving connected fitness in general, and Hydrow specifically,” said Michael Farello, managing partner of L Catterton.
.
