Australia is home to some of the biggest brands in gyms and fitness studios. With the likes of F45, Studio Pilates and Jetts Fitness. Companies like these have set the blueprint for up and coming fitness brands with global ambitions. Capital is an important growth driver of these businesses. However, traditional private capital tends to shy away from early players in the sector, so where can gym and fitness studio founders go for capital? Equity crowdfunding
What is Equity Crowdfunding?
Equity crowdfunding allows Australian companies with under $25 million in revenue or assets to raise capital from a large pool of investors, through a platform like OnMarket. Unlike traditional crowdfunding, where backers receive perks or products, equity crowdfunding provides investors with an equity stake in the company.
The Benefits of Equity Crowdfunding in the Gym and Fitness Studio
Access to capital
Equity crowdfunding offers an alternative avenue to receive equity investment. Although there are some private equity and high-net-worth investors in the sector, they tend to buy-out more mature players in the space. Debt funding can be risky and in times of high interest rates an expensive avenue to raise growth capital. Equity crowdfunding fills these funding gaps.
Higher revenue and higher retention
One of the key benefits of equity crowdfunding is that your customers become investors. This gives them skin in the game and increases their retention. These investors also accelerate word of mouth, as they have a strong incentive for new members to sign on. Throughout the campaign, investors will also become customers. This often leads to a spike in sales post raise, as investors want to use their investor rewards, and see their investment in the flesh.
Brand recognition
Equity crowdfunding offers often garner attention from the media. This can help to legitimise your brand and further push your growth agenda. The brand advocate effect from your investors will also solidify your brand. As they will help familiarise their friends and families with your brand.
Founder friendly terms
In equity crowdfunding the terms, valuation, and investment size are set before raising capital. Investors must agree to these terms to invest. This gives a lot more predictability and control to founders. Private investment from venture capital and private equity often involve extensive terms and valuation scrutiny
Case Studies
Pronto Pilates – Case Study
In November 2024 Pronto Pilates raised $1.55m from 400 new investors via OnMarket. These investors will now act as brand ambassadors in the market growing Pronto’s presence, driving their national expansion plans.
Pronto undertook a CSF raise to bring their members on as shareholders. People resonated with their point of difference, being cost. Throughout the campaign Pronto not only managed to raise $1.55m, but they also sold out all of their territories in Australia. Now over the next 18 months, they will work to expand all over Australia and the US.
Pronto offered differing investor rewards that appealed to both smaller and larger investors. With membership and merchandise benefits for smaller investors, and discounts on opening a studio for larger investors.
Read more here.
1 Rebel – Overseas Case Study
1 Rebel is a London-based, luxury, boutique fitness chain that is revolutionising the gym scene with its pioneering ride, reshape, and rumble sessions. 1 Rebel successfully raised during two raises, $1.5m in 2014 from 294 investors, and $2.9m in 2015 from 433 investors; hitting their maximum in 24 hours.
1 Rebel undertook a CSF raise to enable their passionate supporters to become part of their story and share in the business' success. Funds were used to open new fitness studios.
The first raise helped build a community of supporters, that served as a public endorsement of 1Rebel’s business model. This was shown in the second round when significant investments from industry figures like Pure Gym co-founder James Jack were featured on their cap-table.
Blog in Summary
Equity crowdfunding offers numerous advantages for gyms, from building a strong community of investors to raising capital without losing control. As demonstrated by case studies Pronto Pilates and 1Rebel, gyms of all sizes can leverage this modern financing method to scale operations, expand locations, and improve offerings.
If you are a gym or fitness studio looking to accelerate your growth please get in touch with Issac Newbold, at issac@onmarket.com.au.