Peloton, New York City, has received a $75 million growth capital investment from consumer-focused private equity firm Catterton, Greenwich, Connecticut.
Peloton sells stationary bikes from 12 showrooms around the country for home use, but it also has a cycling studio in New York City where it live streams its cycling classes to Peloton bike owners in their homes. The bike owners also can access classes on demand.
The cycling brand has raised $120 million in total capital since its inception in 2012, according to Tuesday's media release announcing Catterton's investment. Catterton has current investments in Pure Barre, CorePower Yoga and Sweaty Betty. Catterton made a "significant investment" in Pure Barre in May, but terms were not disclosed.
"Catterton's outstanding track record of helping leading retail and consumer companies achieve their goals, as well as their deep understanding of the secular shifts taking place in the fitness space makes them an ideal partner for Peloton," Peloton CEO and Founder John Foley said in a statement. "Catterton's investment marks an exciting milestone in our growth and development."
Foley said Peloton would benefit from a possible initial public offering (IPO), according to a New York Business Journal report.
"Consumers like to invest in businesses that they like," Foley told the Journal, adding he expects Pelton's current showroom footprint to double from 12 locations to 24 locations under its growth plan over the next 18 months.
If Peloton moves forward with an IPO, it could potentially join SoulCycle, New York City, as a publicly traded company. SoulCycle, which reported revenue of $112 million in 2014 and $34.8 million through March 2015, filed for an IPO in July but has not set an IPO date. Peloton expects revenue of more than $50 million in 2015, Pelton Director of Public Relations and Marketing Jaime Kinsley told Club Industry on Thursday.
Peloton bills itself as the only fitness bike to fully integrate a home workout machine with live group cycling classes, allowing interaction with other riders across its network and real-time instructor feedback. There are 100,000 riders on Peloton's bike or iPad app, Kinsley said.
The company sells its 125-pound Peloton-branded bike for $1,995 with a $39 monthly subscription rate on its website. Peloton-branded accessories also are available for purchase. The bike is equipped with a 22-inch high-definition touchscreen and monitors performance metrics. Peloton will have sold around 20,000 bikes by the end of this year, Kinsley said.
Peloton's subscription programming offers more than 12 daily live rides and more than 300 rides on demand. Peloton's 14 coaches lead beginner- to expert-level classes based on themes that include metrics, rhythm and a live DJ.
"Peloton enjoys a loyal and rapidly growing rider base and is ideally positioned at the convergence of multiple fitness trends in the gym, studio fitness and home cardio markets," Catterton Partner Marc Magliacano said in a statement.
Peloton said it will use the proceeds from Catterton's investment to expand its software engineering team, open more showrooms and increase product awareness. Peloton is looking at south Florida and Atlanta as "a few" potential expansion locations, Kinsley said.
Before founding Peloton with Tom Cortese, Yony Feng and Graham Stanton, Foley was the president of eCommerce at Barnes & Noble from 2010 to 2012. Foley also was a founder and CEO of Pronto.com and Evite.com. He has a master's degree in business administration from Harvard Business School, according to his LinkedIn profile.
"John and the Peloton team are pioneering the next evolution of fitness and changing the way people consume fitness at home, with a truly innovative business model and product that combines exceptional design with strong digital content that consumers love," Magliacano said. "We see a tremendous opportunity to build on these strengths and to expand Peloton's reach in both new and existing markets and offer consumers additional at-home fitness alternatives. We are excited to partner with the great people of Peloton to support their expansion."
Founded in 1989, Catterton has $4 billion under management and invests in a variety of consumer segments including food and beverage, retail and restaurants, consumer products and services, consumer health, and media and marketing services.
Correction: An earlier version of this story misidentified Flywheel Sports' status as a Catterton investment. Catterton invested in Flywheel Sports in 2014 and it is listed as a historic investment on its website.