VirZOOM

VR System For Fitness Bikes

Company Information

Website:

https://www.virzoom.com/

Sector:

Virtual Reality

Location:

Cambridge, MA

VirZOOM turns any stationary fitness bike into a virtual reality experience in five minutes.

Using a VR headset and digital sensor, riders can plug its system into bikes at gyms, health clubs, and commercial fitness centers. The result is an immersive, VR-based workout that encourages people not only to go to the gym more often, but to strive for longer, more effective workouts.

VirZOOM is led by co-founders Eric Malafeew and Eric Janszen. Malafeew has more than 20 years of experience in the video game industry, and developed popular games such as Guitar Hero ($2 billion in sales) and Rock Band ($600 million in sales). Janszen was previously Managing Director of a seed investment firm that achieved six successful exits.

Over the last three years, VirZOOM has sold an estimated 2,000 “V1” stationary bikes direct to consumers. Now the company has partnered with the world’s largest commercial fitness equipment manufacturer, and is selling its technology directly to gyms and health clubs around the world.

Recently, successful startups have emerged with the goal of combining fitness with technology. Peloton, for example, makers of stationary bicycles that enable users to “stream” workout classes through the company’s fitness studio, raised $550 million in funding in August 2018 at a $4 billion valuation.

But whereas Peloton relies on video trainers to keep riders motivated, VirZOOM enables riders to work out “inside” a series of VR-based games. Users can ride a Pegasus through the mountains, chase after escaped outlaw cowboys, or compete in the Kentucky Derby. Users can also compete head-to-head with other VirZOOM riders.

A writer for Refinery29, a digital media company geared toward women, had this to say about using VirZOOM’s VR platform:

“I was riding the web-connected VirZOOM fitness bike with a high-end VR headset strapped to my face… the ride felt seamless — I barely noticed that I’d built up a sweat.”

Meanwhile, a writer for Forbes noted “I’d been working out for over an hour but it felt like no time at all.”

Initially, VirZOOM provided these experiences through its stationary bike called the “V1.” In April 2015, just three months after launching the company, VirZOOM raised $5.5 million to manufacture and begin selling its bikes at $399, priced significantly lower than other stationary bikes.

This funding round included several notable venture capital groups, including:

- Skywood Capital, a VC fund investing in early-stage companies with a focus on VR.

- Fairhaven Capital, a VC fund investing in early-stage tech companies.

- And Greycroft Venture Partner Gaming Tracker Fund, a division of Greycroft Partners that invests in startups targeting the VR, AR, and eSports industries.

Since then, the company has sold an estimated 2,000 bikes and the product holds a 4.3 out of 5 stars rating on Amazon.

To make its technology even more affordable, and to reach more customers, VirZOOM decided to sell it directly to gyms and health clubs to add to existing bikes.

Here’s how that works:

The company’s “VZfit” is a complete VR system built into a display with a VR headset. These systems are located at health clubs and fitness centers. Users take the system and plug it into any kind of stationary bike — spin, recumbent, or upright.

In addition, a small VZ sensor communicates motion to the games, and a button users press during gameplay communicates controls.

With VZfit, users don’t have to buy or set up expensive VR systems. All of the pieces are in place for the user to simply put on the headset, plug in the system, and ride.

To manufacture its systems, VirZOOM purchases materials including its Acer headsets, Acer displays, and Intel NUC (a mini-PC with entertainment and gaming features) at retail price. The company’s total cost of goods sold is $1,500, and VirZOOM brings in revenue of $2,995 per system, plus an additional $995 per year for access to its content, remote maintenance, and support.

Using its systems, VirZOOM riders average 3.25 days a week for 38 minutes on a bike, nearly 3x more than traditional stationary bikes.

In Cupertino, California, a local YMCA found VirZOOM’s systems helped the company retain family memberships, as kids and parents were excited to visit the gym to work out.

VirZOOM launched its VZfit system in August 2018, selling to fitness centers in the U.S., Australia, Hong Kong, China, and Turkey. That same year, the company was voted among the “Top 10 Most Innovative Companies” by Fast Company.

Most recently, VirZOOM entered a co-sale and revenue share agreement with LifeFitness, a fitness equipment company specializing in stationary bikes and treadmills. LifeFitness achieved $1 billion in sales in 2017, and through this agreement, plans to bring VirZOOM’s VZfit systems into 20,000 health clubs and fitness centers around the world.

Down the road, this partnership could present an acquisition opportunity for VirZOOM. In January 2016, Brunswick (NYSE: BC), the parent company of LifeFitness, acquired Cybex, makers of cardio and strength products, for $195 million.

Team Background

Eric Janszen - Co-Founder & CEO

Eric brings a wealth of financial and business experience to VirZOOM.

Prior to starting the company, he was an economic analyst for Twin Focus Capital Partners, a company offering investment and financial solutions to high-net-worth individuals and businesses.

In addition, he previously founded iTulip, an online financial services company that attracted more than 8 million visitors. This platform was credited by the New York Times for accurate financial forecasts, and CNBC called it “the place to go for a contrary view of the markets.”

For five years, Eric served on the Board of Directors for TruTouch Technologies, a company that developed a fingerprint sensor that automatically detects a person’s blood alcohol content.

He was previously Managing Director of a seed investment firm that was part of six successful exits.

He earned a Bachelor’s degree in Resource Economics from the University of Massachusetts.

Eric Malafeew - Co-Founder & CTO

Eric has more than 20 years in the videogame industry.

He developed popular games such as Guitar Hero ($2 billion in sales) and Rock Band ($600 million in sales).

Before starting VirZOOM, he worked for 15 years at Harmonix Music Systems, a video game development company, serving as a lead engineer and technical director.

Outside of the video game industry, Eric gained technical experience as a simulation engineer with Lockheed Martin.

He earned a Bachelor’s degree in Mechanical Engineering from Virginia Tech and a Master’s in Mechanical Engineering from MIT.

Anthony Larusso - Director of Hardware Engineering

Anthony spent four years as a program manager for Bluefin Robotics, a company developing automated underwater transportation.

In addition, he served in similar roles for BAE Systems, a British defense and aerospace company, and Analog Devices, a company designing and manufacturing digital circuits.

Anthony studied at MIT.

Rob Kay - Lead Game Designer

Rob has been a game designer for 14 years. He specializes in games featuring virtual reality, cameras, motion controllers, and robotics.

He previously served as Lead Game Designer for Anki, an open-sourced gaming platform.

In addition, he was Director of Design for Harmonix Music Systems.

Rob earned a Bachelor’s degree in Computer Visualization from Bournemouth University.

Co-Investors

Equity Resource Investments

An investment firm with a focus on the real estate industry.

Fairhaven Capital

A VC fund investing in early-stage tech companies.

Greycroft Gaming Tracker Fund

A division of Greycroft Partners that invests in startups targeting the VR, AR, and eSports industries.

Skywood Capital

A VC fund investing in early-stage companies with a focus on VR.