A few days ago, a fitness company called Peloton (PTON) went public.
Peloton sells an indoor exercise bike equipped with a touchscreen tablet. The tablet streams live classes, so you can “ride” with others remotely.
The company has become very popular. That helps explain why it’s now worth $7 billion.
Today I’ll tell you more about it — and then I’ll introduce you to a startup aiming to be the “next” Peloton.
This startup is currently raising money from investors like you…
And as you’ll learn, it could potentially lead its early investors to a windfall of profits.
Peloton — The Basics
Peloton launched in 2014.
Its “big idea” was to bring entertaining indoor-cycling (similar to the in-person classes at fitness studios like SoulCycle or Flywheel) into your home. This would make it convenient for businesspeople, stay-at-home parents, and suburbanites.
Its bike sells for about $2,000. And its streaming content and app cost $39 per month. Using this business model, Peloton brought in $915 million in fiscal year 2019.
Perhaps that figure shouldn’t be so surprising. After all, fitness is a big business.
For example, according to Statista, U.S. fitness centers brought in more than $30 billion in 2017. And according to research service Esticast, by 2024, Americans will be buying $4.4 billion of fitness equipment per year.
But still — a billion dollars in revenue from a five-year-old startup is impressive. At-home fitness has clearly become a very big and important market.
Which brings us to a Peloton competitor called Nexersys…
Like Peloton, Nexersys is a multimedia fitness product you can use from home.
But whereas Peloton mainly focuses on biking, Nexersys focuses on something else:
Boxing, kick-boxing, and mixed-martial arts (MMA).
Here’s what its main product looks like:
Like Peloton, the company sells a physical product, and also provides workout content.
Its content includes video and animated training modules, and its app provides real-time feedback to evaluate user performance.
Since the original version of this product launched in 2012, Nexersys has sold 4,700 of them, for total sales of $10.9 million.
It now sells three versions, ranging in price from about $2,000 to about $7,000.
Up until recently, the company hadn’t done much advertising. Word-of-mouth, as well as appearances on TV shows including NCIS: Los Angeles and Shark Tank, were its primary methods of attracting new customers.
But with the sudden popularity of similar products like Peloton, the company started testing digital media advertising — and the results have exceeded expectations:
For every dollar spent on online advertising, the company brings in $3 to $4 in sales.
And now, to take advantage of these strong economics, the company is raising money.
This is where you come in. The company is currently raising up to $1.07 million. The valuation for the round is $6 million, and the minimum investment is $100.
Should you consider investing? Let’s take a look at the pros and cons.
The Pros and Cons of an Investment
On the “pro” side:
- Its $10+ million in sales proves that there’s a market for its product.
- It’s proven that it can profitably acquire new customers.
- It controls a big portfolio of intellectual property. This includes four issued patents and six pending patents.
Furthermore, the company’s valuation is attractive…
You see, the vast majority of startup takeovers occur at the sub-$100 million level. And the true “sweet spot” is below $50 million. So, given the company’s current $6 million valuation, even a small acquisition could hand investors like you 1,000% on your money.
But on the “con” side…
This is becoming a competitive sector. In addition to Peloton, other interactive home-fitness startups include Mirror, CyberCycle, and FightCamp.
Yes, Nexersys has patents — but the presence of so many companies in the sector adds to the risk of this deal.
To learn more about Nexersys and explore an investment, click here »
Please note: Crowdability has no relationship with Nexersys, or with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.