KFit, the latest fitness venture that takes after the Netflix business model, targeting the Asia-Pacific market, has raised a seven-digit US-dollar seed funding from a handful of venture capital firms such as 500 Startups, SXE Ventures and Founders Global as well as two angel investors.
The fitness venture, founded by former Groupon head of Asia-Pacific Joel Neoh, is also invested in by Neoh himself.
Neoh described the seed funding as a ‘friends and family round’, citing familiarity with the investors involved.
“This was a low single-digit million round of funding (from) the people we are super familiar with, that we have worked with during the past six to seven years,” he said, referring to his ten-year journey in entrepreneurship and at the helm of the Groupon in Malaysia and then the Asia-Pacific region.
In a phone interview with DEALSTREETASIA, Neoh said that the seed round was raised in two days, about five weeks ago.
The investment by five parties entailed a small dilution of shareholding in KFit, which Neoh revealed to be in low double-digit percentage.
While it may be too soon to jump the gun, the response to KFit thus far has given Neoh some idea on its second fundraising.
“The good thing is we have had good traction in the past few weeks and so we have a couple of options for the next round,” Neoh commented, alluding that the second round funding could happen in another one or two months.
“We are not talking about the second round yet because we don’t have anything confirmed but the investors in the first round are really keen to do a follow-on investment,” he said, attributing the investor interest to KFit’s attractive business model based on a sharing economy.
KFit is offered as a subscription-based service, giving customers access to a variety of fitness centres and gyms across major Asia-Pacific cities.
Within weeks of soft launching, KFit has garnered 75,000 registrations and over 500 fitness centre partners across the ten cities it wants to launch in by the first half of this year.
As a measure of how well-received the fitness service is, Neoh said new partners are joining by the hundred each week.
KFit’s plan for May 2015 is to launch in Hong Kong, Melbourne, Sydney and Auckland. By end-June, it plans to be in Taipei, Adelaide, Perth and Brisbane also.
“Our 18-month target is to be in all key cities in Asia,” he said.
Unlike the limiting venue options a single gym membership provides, KFit’s selling point is its access to variety.
It’s advantage is also in its competitive pricing, which are notably lower than the typical gym membership, with the added value of different workout avenues.
KFit is priced at MYR99 per month in Kuala Lumpur and $99 in Singapore. Hong Kong is the next city to be launched although Neoh said the price has not been fixed.
“The price varies, depending on the cost of facilities in each city,” he said, “But our target is to be affordable.”
Although KFit’s arrangements with each fitness centre partner differ, Neoh said the average deal grants subscribers three visits to the centre per month.
KFit’s target market is the majority of people in Asia-Pacific that do not yet have any fitness centre membership, which was in excess of 90 per cent of the population. “Data shows that only 3.8 per cent of Asia have fitness membership and in Malaysia, it is less than 1 per cent of the population,” he said.
“We started KFit to address 90-odd per cent of the people, and at the same time also position ourselves as the first fitness membership that this 90 per cent can sign up for,” Neoh shared.
The business is now in beta mode, with a few hundred users trying out the service. Neoh said the team is getting feedback from the beta run to fine tune its services before opening up the service to all registrants.
KFit will also be launching its mobile app in a few weeks to supplement its reach via its website.
Although KFit’s homepage bears an uncanny resemblance to US-based ClassPass, which works on a similar business model, Neoh said there is no association between the two companies.
“I came across this model some weeks back and I thought it was a great model to democratise fitness,” he shared, noting that the potential in the fitness industry was tremendous.
Fitness business is among the fastest growing in Asia, valued at $14 billion even when less than 5 per cent of the collective population have gym or fitness centre memberships.
On whether Neoh would follow the path of his previous venture in Malaysia-based Groupsmore, which was acquired by Groupon Inc, he said it was too early to detail whether KFit wants to acquire companies or be acquired.
“It’s very early (at this stage) and the team just wants to grow fast, and make sure the experience (of the service) is awesome in every city in Asia. We just want to focus on that first,” he said.
As Neoh jumps on the opportunity to instill fitness as a lifestyle in Asians, he admits that he too was signed up on KFit.
On a lighter note, the avid runner who already holds a gym membership and shared that he was about to give yoga a try, this week; and maybe pole dancing, if his friends manage to convince him to.
The KFit founding team has about 50 people currently, with the operational business in Kuala Lumpur and investment company in Singapore.