U.S. fitness company raises $9.75 mln in bid to join sharing economy

SAN FRANCISCO Thu Jan 23, 2014 12:00pm EST

SAN FRANCISCO Jan 23 (Reuters) - Workout company Fitmob said it has raised $9.75 million as it tries to tap into one of Silicon Valley's hottest trends - allowing people to share goods and services as part of the "sharing economy."

In this case, Fitmob allows trainers to connect directly with prospective clients via a smartphone, through which clients can sign up for group workouts and pay. Currently, Fitmob links customers with instructors offering classes including "Sweat Soiree" and "Gurus Gone Wild."

Like sharing-economy companies TaskRabbit, Lyft and Airbnb, Fitmob sticks to connecting workers with prospective clients rather than employing them itself. The trainers hold their own insurance.

The sector has become very valuable as consumers embrace the businesses, which typically bring greater convenience and lower costs than the traditional companies they are trying to displace. Accommodation service Airbnb, for example, is valued at $2.5 billion, according to media reports.

Raj Kapoor, Fitmob's chief executive officer and a former venture capitalist at Mayfield Fund, said he hopes to attract customers who might otherwise join a gym, or skip workouts altogether.

"Two-thirds of the country is obese," he said, citing U.S. Centers for Disease Control and Prevention statistics. "There's something massively broken here."

He aims to encourage participation by cutting per-class fees from $15 to as low as $5 for Fitmob's most frequent users. For now, the service is available in San Francisco, with plans to expand. The company might later layer on other services, such as nutrition, Kapoor said.

Gym membership is currently a $75 billion business, Kapoor said, although as many as 60 percent of members do not go.

Mayfield led the $6.5 million equity component of the funding, Kapoor said. Silicon Valley Bank provided $3.25 million in venture debt.