ClassPass gets acquired by Mindbody—but doesn’t rule out IPO

October 14, 2021 by Fortune

Back in January 2020, New York City–based fitness startup ClassPass hit a big milestone when the female-founded startup became the first new unicorn of the decade. At the time, CEO Fritz Lanman said that the “eventual goal for us is to IPO.” Today, ClassPass announced it has been acquired by wellness platform Mindbody—but that’s not the end of its IPO dreams.

ClassPass, which was sold in an all-stock deal for an undisclosed price, will continue to operate its monthly subscription service for fitness and wellness experiences, the company said. But founder Payal Kadakia, who launched ClassPass in 2013, will be departing.

The acquisition will also be accompanied by $500 million in funding from Sixth Street, a global investment firm whose prior investments include Airbnb and Spotify. The strategic investment will be used in conjunction with support from Mindbody’s majority investor and partner, Vista Equity Partners, to “accelerate the company's growth and build upon the product innovations and investments that have been made over the course of the pandemic,” ClassPass said in a statement. That will include a virtual platform for business owners and enhancements to Mindbody’s marketing automation tools.

The pandemic has been rough for the fitness industry. After COVID-19 shut down fitness studios and gyms, ClassPass cut staff by more than half in April 2020 and lost 95% in revenue as users stayed home and avoided large gatherings. Like many companies, ClassPass was forced to adapt to new restrictions during the pandemic and rely on technology to keep the business running. Over the past two years, it added virtual home workouts to its platform, as well as thousands of spas and beauty salons for users looking to focus on wellness.

But in-person fitness is bouncing back. About 50% of consumers who engaged in virtual workouts are now looking to try them in person, according to Mindbody's internal research, and ClassPass subscribers are now attending about 110% of the fitness classes that they took pre-COVID, says Lanman, who will now serve as president of ClassPass and Mindbody Marketplace.

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