Hydrow, the maker of a connected rowing machine, said Tuesday it has secured nearly $200 million in financing after its latest funding round with celebrity backers including Lizzo and Justin Timberlake.
Founder and Chief Executive Bruce Smith said a portion of the funding will be used to make sure it has enough product to meet the anticipated demand this holiday season. Hydrow’s machines sell for $2,245, and the company offers on-demand fitness classes including pilates and yoga and rowing instruction through a monthy subscription fee.
The company didn’t disclose its latest valuation, but Bloomberg reported in August that Hydrow is in talks to go public through a merger with special purpose acquisition company Sandbridge X2 Corp., in a deal that would value the combined entity at more than $1 billion.
Smith declined to comment on the report.
“This puts us in the same category as the other leaders in the fitness industry,” he said. “Until now, we might have been a little bit under the radar because people thought of us as a smaller company. But we’re actually very ambitious.”
Hydrow is raising fresh capital at a time when more consumers are returning to gyms and in-person fitness classes, forcing connected-fitness makers to sweat harder to find new users. There are also more at-home options than ever, from Peloton‘s cycles and treadmills, to Lululemon‘s Mirror, to Tonal, to portable boxing machines. Meantime, Peloton is rumored to be working on its own rowing device, which could bring Hydrow even more competition.
According to a monthly tracking by the Wall Street research firm Jefferies, foot traffic to fitness centers has been gradually returning to normalized levels over the summer, as pandemic restrictions ease. As of earlier this month, Jefferies found gym visits back to about 90% of January 2020 levels, and down just 1% from the same period in 2019.
People are returning to gyms most consistently in Georgia, Florida and Texas, Jefferies said, while visits across New Jersey and New York lag the rest of the country.
Among the top players in digital fitness, Peloton has held its spot as the most-visited platform in August, followed by BeachBody, Jefferies added.
“Although last year saw a rise in digital and at-home fitness, we believe this medium will continue to see a drop in utilization as things normalize and will serve as an accompaniment to the traditional gym experience going forward,” Jefferies analyst Randal Konik said in a research note.
Hydrow, which offers on-demand rowing classes, was founded in 2017 by Smith, a former USA Rowing national team coach. Comedian Kevin Hart was an early backer and recently was named creative director.
Last year, the company raised $25 million from investors including LVMH-backed private equity firm L Catterton and Rx3 Ventures, which was co-founded by Green Bay Packers quarterback Aaron Rodgers.
Smith said Hydrow’s sales surged more than 500% in 2020, as consumers looked for ways to workout from home during the Covid pandemic. Through June of this year, sales rose 300% from the same period in 2020, he said.
Moving forward, however, Smith emphasized Hyrdow is a commercial-grade product that can be added to hotel gyms, apartment complexes and other business settings. That’s a strategy Peloton has pursued. It announced this week a new platform for hospitality customers to shop its products, as people begin to leave their homes and Peloton looks for ways to keep building its member base.
“As the economy reopens, that also opens up additional sales for us,” Smith said. “And we’re really determined to be everywhere that our customers are.”
Hydrow is also looking to expand its presence internationally. It plans to use its latest financing to create more live and on-demand content for users, to keep them engaged.