When the pandemic unfolded last year, demand for at-home fitness equipment skyrocketed, and Tonal was no exception. The maker of a smart home fitness trainer experienced an explosive increase in sales, and now the six-year-old San Francisco-based startup is gearing up for its next stage of growth. Tonal is adding $250 million of new funding in a Series E round valuing the startup at $1.6 billion.
Participants in the round include Dragoneer, Cobalt Capital, L Catterton, Sapphire Ventures and athlete investors Drew Brees, Larry Fitzgerald, Maria Sharapova, Mike Tyson and Sue Bird. According to Tonal, the new funds will allow it to spend more on marketing its strength-training product to shoppers to increase brand visibility, grow its catalog of streamed fitness classes and invest further in operations and scaling its business to meet increased demand. To date, the at-home fitness tech startup has raised $450 million.
“We’re really getting ready to scale the business: we’re pouring a lot more capital into marketing and brand awareness, and we’re pouring a lot more capital into scaling our supply chain to get ready for the next phase, which I really think is the next two holiday seasons,” says Orady.
As part of its efforts to increase staffing across the organization, Tonal also added three new executives to its bench: COO Shannon Crespin, a former Johnson & Johnson executive; Chief Strategy Officer Gregory de Gunzburg, who previously served as head of Corporate Strategy and Development at NBCUniversal; and CTO Bryan James, whose previous employers include Google, Nest and Apple. Ostensibly, Crespin, de Gunzburg and James will be crucial to Tonal’s next chapter, as the startup continues to scale on all fronts, including hardware and content production.
This latest round of funding and set of new hires are all steps the startup is taking as part of a slow march toward an IPO, says Orady, although Tonal’s chief executive declined to give a timeline regarding when the startup may go public.
“We’re going to IPO at a time when it’s best for the business, because being a public company can be incredibly distracting,” adds Orady. “I get SPAC offers, or inquiries, almost daily, and our answer is consistently ‘no.’ While an IPO is a great milestone for the business and gives us access to a certain class of capital and liquidity, we also know that you’ve got to do it at the right time.”
Founded in March 2015 by Orady, who was motivated to start Tonal by his own personal quest to shed weight and strength train, Tonal has since carved out a reputation among fitness enthusiasts for an all-in-one design and digital weights system that enables the device to replicate different gym weight stations. Extra Crunch’s EC-1 on Tonal, published earlier this week, offers a unique deep dive into this rapidly growing fitness startup, exploring Tonal’s origin story, product launch, customer engagement strategy, and future outlook.
Tonal’s Series E follows an extremely eventful year-and-a-half for the startup, which saw sales increase 800% from December 2019 to December 2020, causing delivery delays of between 10 to 12 weeks — an issue the company previously told TC it’s working to address by ramping up production of devices, increasing employee headcount and air-shipping equipment from Taiwan to the U.S. to meet demand. This March, Tonal also announced a new partnership with Nordstrom, placing 50-square-foot stations in the women’s activewear departments of at least 40 Nordstrom locations across the U.S., bringing the total number of Tonal physical locations to 60 by the end of 2021.
