Big Profits from the "Next Peloton"?

By Matthew Milner, on Wednesday, October 14, 2020

And we’re off to the races!

Yes, industries like travel and hospitality are struggling during the pandemic.

But two emerging sectors — Fitness Tech and Esports — are soaring.

So today, I’ll introduce you to a startup that’s capitalizing on both of them.

Because, as you’ll learn, an investment in this startup today could be a big winner…

Peloton Soars…

To set the stage here, let’s go back to September of 2019.

That’s when fitness company Peloton went public (Nasdaq: PTON).

Peloton makes at-home fitness equipment like stationary bikes and treadmills, and produces workout videos you can live-stream.

Before the pandemic, shares were trading at about $22. But as demand has grown for at-home fitness products, shares soared…

Today they trade at about $133 — up 600%!

… And New Money Follows

Not surprisingly, professional investors started making bets on tiny startups that might become “the next Peloton.”

And within this arena, they’re investing in two specific sectors:

Fitness Tech (i.e., tech companies that support physical fitness) and Gaming & Esports (tech companies building software or hardware for gaming & Esports).

According to research company CB Insights, funding into such startups has soared more than 1,000% — from $49 million in Q3 2019, to $600 million in Q1 2020.

For example, in Fitness Tech:

  • Health platform Cure.fit raised $110 million from venture funds including Accel, Temasek, and Unilever Ventures.
  • Virtual healthcare platform Vida raised $25 million from Khosla Ventures, Aspect Ventures, and NGP Capital.
  • And after raising about $34 million last year, at-home fitness startup Mirror was acquired in June by Lululemon (Nasdaq: LULU) for $500 million.

In Gaming & Esports:

  • Gaming platform Roblox raised $150 million led by Andreessen Horowitz.
  • Boom, a livestreaming platform for watching Esports, raised $12 million from Boost VC, Betaworks, and First Round Capital.
  • Greenpark, which develops digital experience for Esports fans, raised $8.5 million from Founders Fund, Sapphire Ventures, and SignalFire.

Clearly, professional investors are searching for the “next Peloton” — the next startup that could quickly catch on and help its early investors make a fortune.

And now I’d like to introduce you to a startup that might fit the bill…

Introducing: Virtuix

Virtuix is a pioneer in Virtual Reality.

It’s the creator of Omni, an omni-directional treadmill that allows users to walk, run, crouch, kneel, back up or jump inside videogames and other virtual worlds.

Here’s what its device looks like:

Its existing products, Omni Pro and Omni Arena, are available at 500 entertainment venues in 45 countries.

The company has sold over $10 million of these patented products, and has attracted $20 million from Mark Cuban and prominent venture funds like Maveron.

But now, to tap into the trends of At-Home Fitness and Gaming & Esports, it’s created “Omni One”…

Optimized for the Home

Omni One is optimized for home use.

It’s light, compact (four feet in diameter), easy to fold up and store, and it’s designed to fit in the home — just like a Peloton.

In fact, as the company has said, “We aim to become the Peloton for gamers and bring our popular gaming experience to millions of homes around the world.”

Business Model

The Omni One will cost about $1,995.

But like Peloton, users can buy it with a subscription model:

$55/month for the hardware + $15/month for the games.

Sounds like a lot of money, but those numbers are in line with gaming PCs or Peloton.

And now, to fund this initiative and attract users, it’s raising capital from investors like you.

Specifically, it’s raising up to $10 million at a $65 million valuation, with a minimum investment of $1,000.

Should you invest?

Let’s take a look at some pros and cons…

Pros and Cons of an Investment

On the “pro” side:

  • Traction: The company already has traction with customers ($10 million in sales) and investors.
  • Team: The team brings over 100 years of relevant experience from Activision, Dave & Busters, and Guitar Hero.
  • Trends: The Omni One fits squarely into two major trends: at-home fitness and Gaming & Esports. Clearly, it could become the target of an acquisition.

But on the “con” side, its current valuation of $65 million is steep.

The valuation of a startup is the same thing as the market cap of a public company. It’s the total value of the company at a particular point in time.

So when you invest in a startup, you “buy in” at its current valuation.

We aim to earn 10x on our private investments. To reach that goal here, Virtuix would need to be acquired or go public in the future at a valuation of at least $650 million.

Is that possible?

Well, given Mirror’s $500 million takeover price, or Facebook’s $2 billion acquisition of VR platform Oculus, yes, it’s possible. But not many companies get acquired for such sums.

That’s why I’m not recommending that you run out and blindly invest in Virtuix. This is a risky venture, and it requires substantial investment research.

But if you believe in the emerging trends of At-Home Fitness and Gaming & Esports, and if you’re looking for the “next Peloton,” it’s certainly worth a look!

You can learn more here »

Please note: Crowdability has no relationship with any of the startups we write about. We’re an independent provider of education and research on startups and alternative investments.

Best Regards,
Matthew Milner
Matthew Milner
Founder
Crowdability.com

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