ClassPass Files for IPO After Achieving Unicorn Status with $1B Valuation Following $285M Series E Round

The traditional gym industry’s profitability model relies on selling annual memberships and personal training sessions, resulting in high corporate debt ratios and significant operational risks. In the past, when industry competition was less intense, traditional fitness clubs acquired new customers through various marketing strategies, allowing some large brands to maintain normal operations. However, these gyms’ excessive focus on marketing ultimately led to poor user experiences, causing customers to switch to other fitness facilities.

Nowadays, the emergence of internet-based fitness clubs has delivered a significant blow to traditional gyms. Examples include overseas platforms such as ClassPass and Fitmob, as well as domestic players like Xiaoxiong Kuaipao, Yaku, and Supermonkey. Compared with traditional gyms, this new fitness model offers advantages such as high information aggregation, lower costs, reduced barriers to entry, and enhanced user experience. The annual membership pre-sales and personal training models adopted by traditional fitness clubs are undergoing disruptive transformation.

ClassPass isThe Pioneer of O2O Fitness, with no shortage of followers in its wake. In 2015, when the Internet O2O trend was in full swing, many domestic fitness startups emulated ClassPass’s business model, only to end in failure for the most part. Why did ClassPass thrive in the United States but fail to do so in China? How did ClassPass seize the opportunities presented by the Internet to ride the wave of growth? VCBeat will analyze the company by addressing these questions.

ClassPass, founded by Payal Kadakia in 2013 and headquartered in New York City, is the world’s largest online fitness booking platform, partnering with more than 25,000 fitness clubs. ClassPass offers fitness enthusiasts unlimited access to a wide variety of classes, including yoga, strength training, barbell workouts, martial arts, Pilates, boxing, and indoor cycling. Users can enjoy these classes for a monthly subscription fee of $99. Additionally, ClassPass collaborates with studios and gyms worldwide to market its fitness industry products, acquire new customers, and generate revenue, thereby strengthening its position in the fitness sector.

ClassPass is also a large fitness community that periodically recommends nutritious, healthy recipes to users. Users can also share information on the app, giving it social networking capabilities.

Before college, Payal Kadakia was passionate about dance and founded an Indian dance troupe during her undergraduate years. She graduated from the Massachusetts Institute of Technology in 2005, subsequently working as a consultant at Bain & Company before leaving to join Warner Music Group. During this period, she also established Sa Dance Company, a modern Indian dance ensemble. In the summer of 2009, Sa Dance Company made its successful debut at an international arts festival, earning Payal Kadakia a feature on the arts page of The New York Times. This performance significantly boosted her popularity and attracted considerable attention from investors.

Due to her busy work schedule, she only had free time in the evenings to take dance lessons. On one occasion, she tried to find a nearby dance class, but after searching online for half a day, she found nothing. This made her realize that while there was demand for such classes, there was a lack of a centralized resource where people could find nearby courses.

She noticed that many people around her shared this confusion: when they wanted to exercise, although there were numerous gyms and a wide variety of classes available, non-professionals often struggled to determine which classes were best suited for them. As a result, they had to try different options one by one; if the experience was unsatisfactory, they would have wasted both time and money. This inspired her to develop an app that aggregates fitness class resources. Thus, ClassPass was born, though it was initially named Classtivity.

ClassPass Founder: Payal Kadakia

ClassPass initially entered the market by addressing user demand, aggregating nearby fitness class resources for exercise enthusiasts. At that time, “search engines” were a major topic of public interest, and Kadakia believed there was a viable market for a service dedicated to searching for fitness classes. She also observed that similar services already existed in the market and had achieved considerable success, such as Zocdoc (a platform for finding doctors) and OpenTable (a platform for restaurant reservations). After ClassPass officially launched, it received significant media coverage; however, this exposure merely introduced the product to the public without generating substantial revenue. To further expand its business and increase operating income, the product underwent a prolonged period of iteration and development.

The first added feature isReservationClasstivity modeled its business strategy after OpenTable, the SaaS giant in the U.S. restaurant reservation sector. At that time, Kadakia had aggregated a substantial volume of course resources through startup incubators, yet she remained uncertain about how to effectively leverage these assets. The newly introduced booking feature on Classtivity received a lukewarm market response, with few users making course reservations.

After their initial attempt failed to unfold as expected, Kadakia engaged in deep reflection and steered her team toward a new strategic direction: achieving a tight product-market fit. At this juncture, Classtivity’s strategic roadmap zeroed in on “user experience” as the critical focal point. Kadakia recognized that no matter how prominent a company’s brand reputation might be, it could not be deemed successful without offering courses that truly engage users.

Consequently, the Classtivity team began visiting various gyms to gain a deeper understanding of users’ true needs. Through these visits, Kadakia discovered that many gyms offered complimentary trial classes, which Classtivity could aggregate onto its platform. This approach not only expanded Classtivity’s resource base but also enhanced the visibility and influence of the partner gyms. As a result, Classtivity established commercial partnerships with several gyms.

Classtivity has launched a product namedPassportFor this product, users pay $49 to select 10 classes of interest at designated gyms within 30 days. Initially, users are only required to pay a 25% deposit, with the remaining balance paid per class. This model offers users lower per-class costs and greater flexibility in scheduling.

Within six months of the launch of Passport, Classtivity completed 20,000 bookings, marking a significant improvement over previous search engines. However, Passport’s usage model is more complex than that of its predecessors. Previously, users could directly browse nearby classes on demand and simply click to book once they found a suitable option. With Passport, users are presented with more information and must select 10 preferred classes from these options, rather than just one as before. Although Passport is slightly more complex, it offers users greater choice, thereby capturing a certain share of the fitness market.

As people’s fitness awareness continues to grow and their expectations for workouts become increasingly sophisticated, users are eager to try a wide variety of fitness programs rather than being limited to the few classes they initially signed up for. In 2014, they launchedMembership Program; For just $99 a month, users can become members and enjoy unlimited fitness classes at any location, with no restrictions on frequency. Meanwhile, Classtivity was rebranded as ClassPass.

In 2016, ClassPass adjusted its subscription pricing. The monthly fee for unlimited fitness classes was raised to $190 for existing members, while new users were required to pay $200 for the same unlimited access. Additionally, ClassPass introduced two new fitness plans: a basic tier offering five classes across five different categories for $75, and a core tier providing ten classes across ten categories for $135.

At that time, most gym memberships were sold as annual passes. For fitness novices, the high cost of annual memberships combined with low utilization rates made them less appealing. This monthly membership model not only reduced fitness expenses but also provided users with an excellent experience through access to high-quality fitness resources.

In 2017, ClassPass announced the introduction of virtual currency into its credit system, allowing users to register for classes using virtual ClassPass credits and purchase these classes as needed.

ClassPass’s newly launched products and services have been well received by users. The company has also announced the discontinuation of its previous search engine and Passport offerings to focus on its subscription-based model. Subsequently, ClassPass expanded its partnerships with gyms across major U.S. cities, reaching 50 million bookings by the end of 2018. Currently, ClassPass records approximately 1 million bookings per month, with a user growth rate of 5%.

International expansion has always been a top priority for ClassPass, which currently operates in 28 countries and regions and has established partnerships with more than 30,000 partners, including boutique studios, gyms, and wellness service providers.

As the global COVID-19 pandemic intensifies, ClassPass has taken new initiatives. With the rising demand for home fitness, ClassPass has relaunched its live-streamed online fitness content, launching “ClassPass liveproducts. ClassPass Live enables partner merchants to offer live fitness classes on this platform, set their own pricing, dates, and times, and share links to their live sessions, allowing users to click directly through to their respective streaming platforms. Furthermore, ClassPass stated in a press release that it “will not generate any revenue from these live classes before June 1.” In other words, 100% of the revenue from these live classes will go to the fitness studios and gyms.

Since its inception in 2012, ClassPass has raised approximately $524 million, having completed its Series A, B, C, and D funding rounds in 2014, 2015, 2017, and 2018, respectively.

In January 2020, ClassPass completed a $285 million Series E financing round, led by L Catterton and Apax Digital, with participation from existing investor Temasek. Following this round, the company’s valuation reached$1 billion, officially enteringFitness "Unicorn"Rank.

ClassPass Funding History

In April 2015, ClassPass acquired Fitmob. Founded in 2013, Fitmob was an O2O service provider dedicated to encouraging users to engage in fitness activities. The company owned its own gyms, equipment, and classes, and adopted a pricing strategy of “the more you work out, the less you pay” to incentivize consistent exercise. To date, the company has completed four rounds of financing, raising a total of over $14.8 million.

Fitmob initially intended to adopt a P2P operational model, directly connecting fitness coaches with users. However, during implementation, it encountered numerous obstacles, such as those posed by sports centers and fitness institutions. Subsequently, Fitmob shifted its model to O2O, gradually partnering with fitness centers. By April 2015, it had expanded into eight cities. This collaboration yielded significant results, substantially boosting the company’s sales revenue.

ClassPass’s acquisition spree has never stopped. On January 8, 2019, ClassPass acquired its Asian market competitor, GuavaPass. Often described as the “Asian version of ClassPass,” GuavaPass was founded in 2015 by Rob Pachter and Jeffrey Liu, and it had penetrated the market by partnering with 840 independent studios across 11 cities. Through this transaction, ClassPass acquired GuavaPass’s operations in 11 cities and regions across Asia, including Abu Dhabi, Bangkok, Beijing, Dubai, Hong Kong, Jakarta, Kuala Lumpur, Manila, Mumbai, Shanghai, and Singapore. As part of the acquisition, approximately half of GuavaPass’s team joined ClassPass.

1. Environmental Factors in the United States

On the one hand, due to the fast pace of life and high work pressure in modern cities, many office workers face the threat of various diseases caused by irregular eating habits and a lack of regular exercise. On the other hand, with continuous consumption upgrades, an increasing number of people are beginning to view fitness as an essential part of their daily lives. These demands, arising from ongoing environmental and societal developments, often signal the emergence of new market opportunities.

2. Fitness Habits

Compared with other countries, the U.S. fitness industry started earlier and has developed into a more mature market. The majority of Americans have established fitness habits; before the rise of internet-based fitness solutions, they typically worked out at traditional gyms, and households with sufficient disposable income even purchased home exercise equipment for in-home workouts.

In comparison, China’s fitness industry started later, and the frequency of physical exercise among the general population remains relatively low. Following the introduction of national policies promoting public fitness, the government has strengthened financial and policy support for the fitness sector, leading to its gradual development.

3. Advantages of Partner Brands
ClassPass’s product positioning dictates that its partner institutions are exclusively boutique gyms and high-end fitness studios. By tapping into users’ brand consciousness and offering classes priced within their affordability range, ClassPass has convinced the majority of users to choose its platform—which provides comparable pricing but richer resources and superior quality.

4. Pricing Model

In the United States, membership-based fitness providers predominantly adopt a model where users link their credit cards for automatic recurring charges. When users wish to suspend their membership, ClassPass imposes a $19 fee; reactivating the membership requires an additional $79 payment. Although this pricing structure has sparked widespread controversy in the U.S., most users acknowledge its value in monitoring and constraining their fitness behaviors, thereby expressing general acceptance of the model.

In addition to the above four approaches, ClassPass’s greatest success also lies in itsUser Behavior Analysis. All user behaviors are the result of the combined effects of three elements: motivation, ability, and triggers.

ClassPass has accurately identified users’ core needs, truly adopting a user-centric approach that prioritizes user experience over mere marketing efforts. Meanwhile, as it expanded into new markets, ClassPass remained committed to refining its product. Over the eight years since its founding, its business model has evolved from a search engine to a booking platform, and finally to a membership subscription service. During this period, ClassPass abandoned certain legacy models, boldly innovated and experimented, and rose to meet challenges, ultimately joining the ranks of unicorns in the fitness industry and becoming a bellwether for the O2O fitness sector.