Brazilian startup Gympass has raised $300 million in new funding led by SoftBank’s Vision Fund to speed up its international expansion. SoftBank’s Latin America fund is conditionally part of the raise, while existing backers General Atlantic, Valor, and Atomico all joined the round.
Gympass partners with employers to offer corporate wellness schemes, providing employees who sign up with discounted gym memberships.
Gympass was founded by Cesar Carvalho in Brazil 2012, after he dropped out halfway through his MBA programme at Harvard.
In the last seven years, it has expanded further into Latin America, Mexico, the US, and Europe. The firm is now headquartered in New York and plans to use the cash injection to fund its expansion to Asia, Carvalho told Business Insider.
Carvalho said Gympass was different from services like ClassPass, which allow individual consumers to sign up for multiple fitness classes for a flat fee.
The UK’s Hussle/PayAsUGym likewise lets consumers pay cheaper rates for gym membership.
But Gympass only works with employers, and says it is primarily targeted at people who don’t tend to exercise at all.
“Our biggest competition is the couch,” Carvalho said, in an echo of Netflix CEO Reed Hastings. Hastings famously said in 2017 that the streaming service’s main competition was sleep.
Carvalho described Gympass’s model as a “three-sided marketplace.” It targets HR departments to get corporates on board, but must also persuade gym networks to sign up to its platform. Once an employer is on board, employees interact with Gympass through a dedicated app.
Gympass makes money by charging employers a fee to sign up to its platform. This effectively subsidises employees, who pay a discounted gym membership rate to access any gym on the Gympass platform. Gympass then hands a portion of that fee every time a member visits the gym, although Carvalho didn’t detail how much. The sell to gyms is an increase in footfall and access to customers who, theoretically, would never have visited without a Gympass membership.
The company has signed up blue-chip customers such as PwC, British supermarket Tesco, mobile network Telefonica, and Disney. The firm says it has 2,000 corporate clients, and 47,000 gyms signed up across its 14 markets.
The model makes Gympass a fairly sales-heavy operation for now. Carvalho said the company has around 1,000 employees, with around 20% focused on technology and the rest focused on corporate and sales.
Carvalho doesn’t say whether the firm is profitable, although it’s fairly safe to assume not given its focus on rapid growth.
“Even in the most mature markets, the ones where we started seven years ago, we’re still in the early days,” he said. “In the most mature markets, we’re reaching 10% of the clients we could reach. To me, there’s still a huge opportunity to get clients to join our mission.”