Zwift raises an additional $ 450 million, now likely valued at over US $ 1 billion

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Earlier today, Zwift announced an investment of US $ 450 million (approximately AU $ 625 million) in ‘Series C’, which will provide the six-year company with significantly more funding than its seven investments. precedents together. According to Bloomberg, this latest round of investments values ​​the company at over US $ 1 billion.

Global investment firm KKR, a diversified asset firm with strong investments in technology companies, has led this latest round. Other participants in the investment include Specialized Bicycle Components’ Zone 5 Ventures venture capital fund, private equity firm Permira, and Amazon Alexa Fund. Existing investors, including True, Highland Europe, Novator and Causeway Media, also contributed more to this latest round of funding.

This latest round of investment has undoubtedly been supported by the current global pandemic, and Zwift is not alone in benefiting from it. According to Bloomberg, the publicly traded indoor fitness company Peloton reached 1.09 million paid subscribers in the last quarter, up from 712,000 at the start of the year. Meanwhile, Zwift’s more accessible software product claims to have registered more than 2.5 million accounts in 190 countries since its inception.

According to a press release from Zwift, this investment will be used to “accelerate the development of Zwift’s core software platform and bring Zwift-designed hardware to market, making Zwift a more immersive and transparent experience for users.” .

This hardware investment is likely to be the next big game for Zwift and it’s something we covered at the end of 2019 when the company posted a number of openings for hardware engineers. Such a hardware game should help Zwift more directly compete with Peloton, which currently holds a market cap of US $ 23 billion.

In material terms, the investment of Zone 5 Ventures is more than intriguing and is accompanied by a partnership between Zwift and Specialized. “Specialized’s investment represents the start of a strategic partnership between the global cycling brand and Zwift,” said Specialized’s product manager. and Innovation Chris Yu in a press release. “Both brands share the belief that cycling, whether indoor or outdoor, has the power to improve lives.” What exactly this partnership entails has not been publicly discussed.

“With this investment, Zwift is poised to operate in a broader fitness market and realize its ambition to deliver gamified fitness through integrated software and hardware, to anyone who wants to have fun while getting in the game. form at home, ”said Eric Min, CEO of Zwift and co-founder. “We will accelerate our investment in the core business, improve the overall product experience and deliver new features, more content and material designed by Zwift, all with the support of KKR and our new external investors who can contribute to our growth.

“To achieve this, we will increase the number of staff within our core product teams, by investing in the best people.”

It should be noted that Ilkka Paananen, the founder of the Finnish video game company Supercell, has joined as both an investor and an independent member of the board. Supercell is the creator of mobile games like Clash of Clans and Boom Beach.

However, Min’s mention of the increase in staffing is likely to be a painful dagger for some 25 senior executives released at the start of the pandemic.

So, what future for Zwift? Well, such a cycle of investment suggests that many smart people believe that Zwift will only grow from here, and in a substantial way. And while increased focus on new hardware and virtual racing is most definitely on the cards, much of the long-term opportunity exists in growing the market beyond existing riders.

The Sydney Morning Herald (SMH) spoke with Min about his interest in the larger fitness market in which Peloton plays. “I think Peloton has been just great for the overall space,” he said. “I definitely think they spend a lot more money than we do advertising and promoting indoor cycling, so we just want to join the conversation when people are exploring the possibilities for indoor exercise. . ”

And while there is no timeline for a public offering, Min told SMH, “I think this is the kind of company that will eventually get listed.”



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