305 Fitness

305 Fitness

Growth Stage

Cardio fitness program with studios across the U.S. and certified instructors worldwide

Cardio fitness program with studios across the U.S. and certified instructors worldwide

Overview

Raised to Date:
$311,279 - RegCF
$1,141,279 - Total

Total Commitments ($USD)

Platform

SeedInvest

Start Date

09/13/2021

Close Date

11/19/2021

Min. Goal
$25,000
Max. Goal
$1,070,000
Min. Investment

$1,000

Security Type

Convertible Note

Series

Pre-Seed

SEC Filing Type

RegCF / RegD 506(c)    Open SEC Filing

Valuation Cap

$25,000,000

Discount

30%

Rolling Commitments ($USD)

Status
Funded
Reporting Date

11/29/2021

Days Remaining
Funded
% of Min. Goal
Funded
% of Max. Goal
Funded
Likelihood of Max
Funded
Avg. Daily Raise

$4,716

Momentum
Funded
Create a free account today to gain access to KingsCrowd analytics.
Year Founded

2012

Industry

Fitness & Wellness

Tech Sector

HealthTech

Distribution Model

B2C

Margin

Medium

Capital Intensity

High

Location

New York, New York

Business Type

Growth

305 Fitness, with a valuation of $25 million, is raising funds on SeedInvest. The business offers cardio fitness programs and has studios across the US with certified instructors worldwide. 305 Fitness has seven flagship studios across the US and launched its at-home platform during COVID. The business has trained and certified over 1,000 instructors to teach 305 Fitness in their local gyms and communities. Sadie Kurzban founded 305 Fitness in March 2012. The current crowdfunding campaign has a minimum target of $530,000 and a maximum target of $1,070,000. The campaign proceeds will be used for certification acquisition, music licensing, tech investment, brand marketing, studio operations, and legal and administrative expenses.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$2,819,860

$7,126,147

COGS

$584,376

$1,999,927

Tax

$13,288

$2,629

 

 

Net Income

$-3,524,713

$-970,210

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$2,574,724

$5,880,746

Accounts Receivable

$682,763

$458,619

Total Assets

$3,759,267

$6,701,602

Short-Term Debt

$1,028,413

$991,368

Long-Term Debt

$1,083,609

$72,628

Total Liabilities

$2,112,022

$1,063,996

Financials as of: 09/13/2021
Create a free account today to gain access to KingsCrowd analytics.

Upgrade to gain access

Pay Monthly
Annually (Save 17%)

Edge

$25 /month
billed annually
Free portfolio tracking, data-driven ratings, AI analysis and reports
Plan Includes:
Everything in Free, plus
Company specific KingsCrowd ratings and analyst reports
Deal explorer and side-by-side comparison
Startup exit and failure tracking
Startup market filters and historical industry data
Advanced company search ( with ratings)
Get Edge Annual
Already a member? Log in here.

Ratings KingsCrowd Startup Rating Methodology Article

Blurred Ratings Bars Blurred Ratings Bars

Analyst Report Analyst Report Methodology Article

Synopsis

The pandemic has stopped fitness enthusiasts from going to their favorite fitness studios, and 44% of them are exercising less now. In an effort to adapt, coaches and trainers started offering live streaming videos as well as pre-recorded videos to guide workouts at home. As a result, virtual workouts have exploded in popularity recently. This trend applies to all kinds of fitness, such as yoga, barre, weight training, and dance. 

305 Fitness has been operating since 2012 as dance workout studios. The company has seven physical studios spread across New York, Boston, and the District of Columbia. 305 Fitness aims to make exercising fun and affordable by combining dance and fitness. Each class uses live DJ music mixes and light design. Due to COVID-19, 305 Fitness quickly pivoted its business model from physical studios to a hybrid of in-person studios, silent disco outdoor classes, and digital classes. It also expanded its customer awareness by giving trained instructors licenses to teach their own communities in 305 Fitness format and with its tools and music mixes. 

305 Fitness’ current SeedInvest raise has been rated a Neutral Deal by the KingsCrowd investment team.

Next Section: Price

Price

305 Fitness is raising through a convertible note at a $25 million valuation cap with a 30% discount rate. The company earned $2.8 million in revenue last year, which yields a revenue-to-valuation multiple of 8.9x. That multiple is above average for the fitness industry and would make 305 Fitness overpriced in this round. However, the company did see more than $7 million in revenue the previous year. The strong decrease can be directly attributed to the effects of the pandemic. Taking $7.1 million as normal and achievable revenue for the company, the revenue-to-valuation multiple would be average at 3.5x. Additionally, a $25 million valuation is reasonable in comparison to other growth stage startups raising capital online. Thus, 305 Fitness is appropriately priced in this round.

Next Section: Market

Market

305 Fitness targets a hybrid market of in-person fitness and virtual fitness classes. The US gym, health, and fitness market is currently worth $37.0 billion. This market is extremely segmented, and there are countless competitors. Thus, 305 Fitness can likely only grab a small market share with its physical studio locations. On top of that, this market is not growing substantially, so there is limited upside in this market. 

Virtual fitness offers much more promising prospects. The global online and virtual fitness market was worth $6.04 billion in 2019 and is expected to reach $59.23 billion by 2027. This market is currently growing annually at a rate of 33.1%. Although 305 Fitness’ obtainable market is certainly lower than this — as there is also heavy competition in this market — it is still a sizable opportunity. There is huge potential for this market as well because of the rapid growth, and the virtual fitness trend seems here to stay. By using a hybrid model of in-person studios, revenue shared with licensed instructors that teach 305 style in communities worldwide, and digital classes, 305 Fitness has diversified its business model. Given these different revenue streams, the company is bound to grab even more market share than a normal fitness studio would. All of these factors combine to provide a solid market outlook for 305 Fitness.

Next Section: Team

Team

CEO Sadie Kurzban founded 305 Fitness. Kurzban has a bachelor’s degree in economics from Brown University. Although she graduated from a prestigious university, she does not seem to have other experiences prior to this venture. It could be difficult to convince investors that she has the skill set to guarantee the future growth of the company. Regardless of Kurzban’s lack of experience, she successfully bootstrapped 305 Fitness early on and built a strong brand. This branding is a crucial way for the company to stand out against the competition. It also creates more customer awareness and stickiness. 

Kurzban has successfully brought on a diverse team that covers operation, marketing, finance, partnership, instructor development, design, and licensing. This impressive team enables 305 Fitness to have a wide and comprehensive network. The team’s overall team skill set is the key to the company’s success. 

There are also notable investors and advisors surrounding 305 Fitness. Some notable investors are DJ Tiesto, Kevin Durant, and the founder of Pure Barre, Carrie Dorr. The advisors come from very relevant backgrounds, such as Crossfit, Barry’s Bootcamp, and Project Runway. Having knowledgeable advisors will likely boost the company’s growth and provide a strong supplement to the already well-formed team.

Next Section: Differentiators

Differentiators

305 Fitness aims to build the next generation of Zumba with brick-and-mortar studios, online classes, and certified instructor training to teach 305 worldwide. The company differentiates itself by making exercise fun and affordable. However, there are tons of competitors that are in the dance fitness space. There are also countless free videos posted on social media, such as YouTube. These competitors exist both online and offline. 

Outside of dance-based exercises, there are a great number of other types of exercises that 305 Fitness also competes with. Since the pandemic increased the importance of being digital, even more virtual fitness classes will probably jump into the space. With numerous competitors in the space, it is difficult to see how 305 Fitness can distinguish itself. The company charges for its services while free videos are available elsewhere, so it does not have a price advantage. The service itself is easy to replicate, and there is no patent or intellectual property that can boost its defensibility. With no indications that 305 Fitness’ method of exercise is inherently superior to its competitors, the company offers no differentiation to set it apart or increase its likelihood of success.

Next Section: Performance

Performance

305 Fitness was able to bring in an impressive $7 million in revenue in 2019. This revenue significantly decreased to $2 million in 2020. On top of this, the company’s long-term and short-term debts have both increased considerably. These negative financial changes can be understandable considering the impact COVID-19 had on physical gym studios like 305 Fitness. Ignoring the unexpected effects of the pandemic, the company’s traction is outstanding. It has seven studios across New York City, Boston, and Washington, DC. The two most mature studios generate around $2 million in revenue. 305 Fitness received an average of 10,000 visitors per week across the seven studios in early 2020. 

During the pandemic, the company rapidly pivoted to licensed instructors and digital classes. 305 Fitness has launched silent disco outdoor classes, generating $225,000 in rent-free revenue. It has trained more than 1,000 certified instructors in 40 states. Each of these instructors can potentially widen the awareness of 305 Fitness classes within their network. This business model increases the company’s revenue and at the same time keeps costs low by eliminating the need for renting physical spaces. There is also great loyalty from these instructors, as about 70% of them stay in the network even two years after training. 

305 Fitness has also gained 3,000 paying digital subscribers. Moreover, 305 Fitness has excellent branding. It has 200,000 email readers and social followers combined across YouTube, Instagram, and TikTok. The company has also previously raised a huge amount of investment capital at $14 million. All in all, the company has shown a terrific track record before and during the pandemic.

Next Section: Risks

Risks

In general, 305 Fitness is a low-risk investment opportunity. The company has moderate team risk, as it is led by a founder who lacks experience in managing a company. Sadie Kurzban started 305 Fitness after graduating from Brown University, so she has no prior experience to indicate she can bring the company to success. The company also has some financial risk, as it is not profitable yet. 305 Fitness’s short-term and long-term debts have increased during 2020. Lastly, the company is capital-intensive, as it is expanding to build more physical studios. It is also labor-intensive because the business involves training instructors over a period of time. Needing so much capital to grow could impact the scalability of the company.

Next Section: Bearish Outlook

Bearish Outlook

305 Fitness is positioned in both the physical and virtual fitness markets. The physical fitness market has been declining. Consequently, many fitness enthusiasts have come to appreciate digital, at-home alternatives. Although 305 Fitness has started pivoting to virtual classes, its main revenue stream is still the flagship studios. The online and virtual fitness market also has countless players, and more are expected to jump into the space. 305 Fitness has very little service differentiation or defensibility. It will be difficult for the company to stay competitive in the future if the service is not innovative enough. Additionally, the company might have some scalability issues, as it is both capital- and labor-intensive. 

Next Section: Bullish Outlook

Bullish Outlook

305 Fitness has shown an outstanding track record. It has gained an impressive amount of traction from its flagship studios, licensed instructors, and digital classes. Although the company’s in-person studios were greatly impacted by the pandemic, 305 Fitness has wisely expanded to other business models, which have also been showing great results. The company has an amazing social presence. It has been able to build a loyal community, which is key to standing out in the competitive market. 305 Fitness has very strong branding, presenting itself as a good option for people who want fun exercises while not feeling like they are working out. This messaging has succeeded thus far, and 305 Fitness might be able to continue spreading its brand across the country.

Next Section: Executive Summary

Executive Summary

305 Fitness offers dance workouts through its seven flagship studios spread across New York, Boston, and Washington DC. After being greatly impacted by the pandemic, the company expanded its business model to digital classes and sharing revenue with licensed instructors. The company has shown impressive traction and social presence. As a result, its current valuation seems fair. 305 Fitness has managed to build loyalty from both its licensed instructors and customers through great branding. On top of that, 305 Fitness is also riding an upward trend through the rapidly growing market of online fitness classes. 

On the other hand, the biggest revenue stream for 305 Fitness is still its flagship physical studios, and the physical studio market has been suffering lately. 305 Fitness competes with countless competitors, and its services don’t appear to stand out from the crowd. Maintaining physical locations and training new instructors are both capital- and labor-intensive operations, so 305 Fitness will need to see its revenue quickly recover from its pandemic-fueled decrease. The company’s founder does not have any experience prior to this venture, making it difficult to judge whether or not she can bring the company to success. Taking these factors into account, 305 Fitness is a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Inez Sanjaya.

Founders: enhance your startup's credibility on KingsCrowd. Create an account to claim this raise page.
Add to portfolio
305 Fitness on SeedInvest 2021
Platform: SeedInvest
Security Type: Convertible Note
Valuation: $25,000,000

Follow company

Follow 305 Fitness on SeedInvest 2021

Buy 305 Fitness's Deal Report

Warning: according to the close date for this deal, 305 Fitness may no longer be accepting investments.

305 Fitness Deal Report

Get KingsCrowd’s comprehensive report on 305 Fitness including:

  • How our proprietary algorithm rates their current capital raise (1-5 stars)
  • Detailed price, market, team, differentiators, performance, and risk ratings
  • Whether 305 Fitness is undervalued or overvalued
  • Scores on the founding team and key personnel's background and expertise
  • Our deep-dive analyst report reviewing the deal's investment potential and bullish vs. bearish outlook

Buy the 305 Fitness deal report for only $10!

Email address:
Looking to buy more than one deal report? Get unlimited reports by upgrading to Edge