On March 31, Tonal announced that had raised another $250 million in a Series E funding round with a valuation of $1.6 billion, putting the company in unicorn status.
Tonal is one of the fastest-growing connected fitness companies on the market right now, and new investors include Drew Brees, Larry Fitzgerald, Maria Sharapova, Mike Tyson, and Sue Bird. Also included in this fundraising round was Dragoneer, with participation by Cobalt Capital and existing Tonal investors, including L. Catterton and Sapphire Ventures.
It’s not surprising to see Tonal expanding this quickly, as they have to fend off pressure from Nordictrack with their existing/upcoming products and with Peloton’s entrance into the strength marketing ever looming.
Why is Tonal raising so much money?
A lot of people might wonder why Tonal doesn’t grow organically rather than continue to raise capital. The reason is that they’ve got to gain market share faster than their competitors. The iFit products continue to grow and they have years of a branding headstart over Tonal. Peloton has become the de facto name in connected home fitness, so whenever they release a strength product, it’ll become a household name overnight.
iFit works on a variety of products (rowers, treadmills, bikes, etc) including their CST lineup while Peloton’s CEO continues to hint about their ambitions for the strength market.
Tonal is at a crossroads where they must turn the big two (Peloton and iFit) into the big three with Tonal becoming a household name. Both Peloton and iFit have an advantage with whatever they release, as customers will already be in their ecosystem and paying for the content subscription. Tonal has to get into as many homes as possible in a very short time window before they become just a “me-too” product with their competitors. There are well-defined products in connected bikes, treadmills, and rowers, so strength is the one that will see the largest growth in the coming years.