DJ Tempo Raises $60 Million to Help You Work Out at Home -- Barrons.com

By Luisa Beltran

Tempo, a startup that provides people with a home gym and an artificially intelligent personal training system, raised $60 million Wednesday in a series B round led by Norwest Venture Partners and General Catalyst.

Prior investors DCM, Bling Capital, SignalFire, Founders Fund and Y Combinator participated in the B round. So far, Tempo has raised $77.5 million in total, including a $17.5 million series A round in February.

Tempo -- which refers to the speed a person can lift weights repeatedly -- is the brainchild of its CEO and co-founder Moawia Eldeeb. When Eldeeb was in high school, he says his family's home burned down, causing them to move into a Red Cross shelter. "Personal trainers trained me and helped me get my life back together," Eldeeb told Barron's. He also worked as a personal trainer to pay for college.

Many people, however, can't afford personal trainers. Eldeeb founded Tempo with the goal of making fitness training affordable for everyone

Eldeeb said he also wants to help people to not feel bad about fitness. Gyms in America are filled with people who join "in January and by February give up when they don't see a six-pack," he said.

Tempo customers receive a free-standing fitness machine that features a 42-inch touch screen. Shaped like an easel, the screen uses 3-D sensors to track motions, count repetitions of workouts, and correct mistakes. Tempo also comes with a barbell and weights that let users lift from 7.5 pounds to 100 pounds, a workout mat, a foam roller, and a heart rate monitor. Users can pay two ways: An upfront $1,995 with a $39 per month content subscription or they can finance the cost by paying $55 a month with a $39 a month content subscription. Eldeeb estimates Tempo has a "few thousand customers."

The core part of Tempo is the training, Eldeeb said. The startup has downloaded five years of data from SmartSpot, Tempo's B2B predecessor founded by Eldeeb, that gyms use to instruct users on how to workout properly. This allowed Tempo to collect "millions of workouts" featuring people of different backgrounds, races and body types. Tempo used this data to train the artificial intelligence that tells users when they're arching their backs or flaring out their elbows, Eldeeb said. The artificial intelligence also lets users know when they've corrected their mistakes in positioning, he said. Users can access on-demand workouts and live exercise classes with trainers, of various kinds.

Tempo, unlike Peloton Interactive (PTON), does not have a camera but a sensor that takes in a 3-D model of a person's body. The artificial intelligence looks at joints and range of motion; its vision is limited up to six feet, he said. Tempo has uploaded "enough hardware that it can't be hacked. We built it from the ground up with that being first in mind," Eldeeb said.

Tempo's series B round comes months after the startup raised $17.5 million earlier this year. The San Francisco-based company had 70% of the series A round left but realized that it didn't have enough money to fulfill its backlog of 3,000 unfulfilled orders, he said. In June, Tempo decided to raise another round, Eldeeb said. He plans to use one-third of the $60 million to "onboard three humongous manufacturers." Right now, it takes six to eight weeks to receive a Tempo, which Eldeeb hopes to cut down to two weeks by September and one week by November or December. "Right in time for the holidays," he said.

Tempo currently employs 50 people and Eldeeb plans to double that by the end of the year. The startup is also on track to produce $100 million in annual revenue by December, he said.

Tempo's successful fundraiser comes during a pivotal time for the fitness sector. The Covid-19 pandemic has caused businesses across the U.S. to shutter. This has spurred disruption in the fitness industry, which has seen 24 Hour Fitness and Gold's Gym seek chapter 11 bankruptcy protection. The pandemic accelerated the trend of fitness moving into the home, Eldeeb said. Some have benefited from the switch. For instance, Peloton's stock has jumped by 125% this year. "The market has changed forever. [Covid-19] was the best thing possible [for Tempo]," he said.

The pandemic also weeded out gyms that use gimmicks to attract people, he said. Many big box gyms rely on the fact that a segment of their customers will never physically attend. Eldeeb expects boutique gyms that cater to people with strength goals, who actually go to the gym, will survive. "[Gyms] need to change and serve their actual customers and build space for the 400 that actually show up," he said.

Write to Luisa Beltran at luisa.beltran@dowjones.com

(END) Dow Jones Newswires

July 29, 2020 18:17 ET (22:17 GMT)

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