NEOU, ‘Netflix of Fitness,’ Raises Funds From Investing Titans

(Bloomberg) -- Some Wall Street titans are betting the at-home fitness boom will far outlast quarantine life.

NEOU, a startup that describes itself as the “Netflix of fitness,” raised $5 million in fresh capital from investors including Ares Management Corp. Chief Executive Officer Mike Arougheti and David Flannery, a former GSO senior managing director. The round valued the company at about $40 million, CEO Nathan Forster said in an interview.

Named for the company’s mission to help create a “new you,” NEOU has raised $30 million since its 2015 founding. Existing investors including Bowers & Wilkins CEO Gregory Lee, and Fresh Direct LLC co-founder Jason Ackerman contributed to the latest round. New funds will be used to expand its offerings to attract new customers, Forster said, and the New York-based company is striving to become profitable in the next 12 to 24 months.

Like other at-home fitness providers including Peloton Interactive Inc., NEOU has been helped by stay-at-home orders aimed at stemming the spread of Covid-19. NEOU, which charges U.S. customers $14.99 a month or $74.99 a year for access to more than 3,000 fitness classes including DJ Steve Aoki’s “Aoki Bootcamp,” now has more than 50,000 paying customers in over 65 countries.

“We’re the Netflix of fitness based on our user experience and affordability, and an Amazon to content creators, in that we are a marketplace that provides trainers with a way to digitally scale their businesses,” Forster said. The startup has interviewed advisers and begun conversations with prospective institutional investors ahead of plans to raise $25 million to $50 million later this year to further fuel growth, he said.

‘Vixen Workout’

NEOU enters into revenue-sharing and licensing agreements with brands that use its platform. Popular workouts include “The Program,” often led by Take-Two Interactive Software Inc. CEO Strauss Zelnick, and the dance-based “Vixen Workout” and stretch-focused “Base.” Due to nationwide work-from-home orders, the company halted filming of new content, but is planning on returning to its studios this month.

“I believe at-home fitness is a mega-trend in the wellness industry,” said Arougheti, who first invested in the company in 2017 after being introduced to Forster by another investor, James Dworkin. “And NEOU will have tremendous value in the space as a first mover.”

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