Sports tech eGym lures former 3M boss as chair to prepare IPO

A Bavarian startup proves that Germans can make cutting-edge software for the booming health-club market. A former 3M CEO, George Buckley, will become its chairman to prepare a stock market listing.

Set your weight-training machines yourself? That’s so yesterday.

Based in Munich, eGym is a sports tech startup that builds internet-enabled strength-training machines and mobile apps for tracking fitness metrics. It has a cloud platform that stores data from connected machines, wearables, apps and other gadgets – a key part of its appeal.

Founded in 2010 by Philipp Roesch-Schlanderer and Florian Sandler, two former schoolmates from the southwest German town of Sindelfingen, eGym set out to give the country’s booming health and fitness scene a digital shot in the arm.

Two years previously, the budding entrepreneurs traveled across Germany in search of investors, wielding a single prototype machine they had built themselves. They initially managed to sell eight machines to a gym, although they had only developed one. Business took off from there, with Roesch-Schlanderer providing the ideas and Sandler the technical savvy.

eGym now employs around 350 people, mostly in Munich with a few developers in a second location in Berlin. Around 14,000 fitness and health facilities in Europe and the US now use eGym products, according to the company.

Breaking a German stereotype

“The special thing about eGym is that it networks hardware with software,” said Alexander von Frankenberg, managing director of High Tech Gründerfonds, one of eGym’s first seed investors. Although German companies are good at building machines, they’re usually not leaders in software, a problem eGym has obviously cracked.

The company is now looking to shift into a higher gear. It has attracted the former CEO and chairman of US conglomerate 3M, George Buckley, as chairman to take it to the stock market. “We were looking for an experienced top manager, who has experience with fast-growing companies and who could develop our firm to become a market leader and support a potential stock-market listing in a few years’ time,” Roesch-Schlanderer told Handelsblatt.

Buckley, who indirectly managed fitness equipment maker Life Fitness when he was CEO of Brunswick, sees huge potential to grow overseas. “The US health market is more than half as big as Germany’s entire economy,” Buckley told Handelsblatt.

For eGym, the all-important digital fitness market indeed is America’s, more than seven times larger than Germany’s (see graphic above). That’s why the company is pouring millions of dollars into expansion across the Atlantic. “There is hardly any other industry that is so US-heavy, except perhaps the market for air conditioning,” quips Roesch-Schlanderer.

While eGym does not publish its financial data, industry experts estimate the company has sales approaching $100 million and annual growth of around 50 percent. Its founders are clearly thinking big: Roesch-Schlanderer says he could imagine $1 billion as a medium-term sales target.

Last November, eGym collected $20 million (€17.5 million) in its fourth round of financing, bringing its total fund-raising proceeds to more than $100 million, according to Handelsblatt. NGP Capital was lead investor in the latest financing sortie, but existing shareholders Highland Europe, HPE Growth Capital and Bayern Kapital also participated.

The firm is considering tapping investors again this year, mindful of the big bucks that are being coughed up for selected fitness techs. Last year, Peloton – a San Francisco startup whose main product is a stationary bicycle allowing users to stream spinning classes – raised a whopping $550 million in a sixth round of funding, valuing the company at $4 billion.

eGym plans to extend its recent spate of takeovers. Last June, eGym bought Qualitrain, a north German provider of corporate fitness training used by 60,000 staff from over 800 companies. Just three months before that, the Munich startup purchased Netpulse, a leading American provider of custom-branded mobile apps for health clubs.

Customers of eGym can keep all their fitness data in the cloud, and the platform is compatible with a range of machine brands used in many health clubs. Initially, gym members configure their settings on each machine with the help of a trainer, and the numbers are saved in the cloud; at the next training session, the machines load these personal presets automatically.

Elements of play, such as collecting points along a training curve, are part of a process known as “gamification.” Users can train competitively with friends and create their own individual training plans on eGym apps.

The company offers studio-branded mobile apps, meaning individual clubs can use them to provide members with personal training programs. Physiotherapists and companies with in-house fitness rooms are part of their target group.

Source: Handelsblatt

Authors: Axel Höpner is the head of Handelsblatt’s Munich bureau, while Camilla Flocke writes for the publication in Berlin. Jeremy Gray is an editor for Handelsblatt Today.

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