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Emerging Vertical Software Deep Dive – Wellness Software

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Michael Brown

April 12, 2017

We at Bowery Capital released the 2016 edition of Opportunities In Vertical Software in November, which laid out our point of view on ten specific verticals and the potential for various software solutions to dominate each of these ten verticals in the coming years as well as technology shaping the future of four emerging vertical. This Emerging Vertical Software Deep Dive post is intended to provide an analysis of wellness software history, market themes, & investors.

History of Wellness Industry Software

The earliest advent of software in the wellness industry came with the development of membership management software platforms. Fitness centers gained the capability of tracking and managing their members and contracts. Over time, membership management platforms shifted from operating as a client database to a more holistic fitness center management platform, allowing for the integration of billing, payments, equipment tracking, scheduling, and much more. Fast forward to modern times, there are 6 billion mobile subscriptions and over 10 thousand fitness apps. Both enterprises and consumers place a high focus on enhancing the wellness experience via technology. With over 30% of gym members seeking to switch gyms for a more “connected” experience and margins shrinking due to increased competition, fitness centers are adopting software solutions rapidly to differentiate against the competition.

Wellness Software Market Themes:

(1) The emergence of “Generation Health” as called by the Johnson & Johnson CEO, has brought rise to wellness software applications. With millennials placing lots of value into wellbeing and positive mindset, several new technologies emerged to aid in tracking and quantifying these goals. Companies like Fitbit and Strava allow users to track activity and monitor trends and performance over time. Other companies like AirVisual and Air Sensio allow users to track pollution and allergens in the air. While providing an enhanced lifestyle to users, these companies also collect a wealth of data that can be used to further enhance the experience and subject matter specific research.

(2) Increased demand for an enlarged fitness network and on-demand fitness have driven the rise of startups focused on opening up access for members to several fitness clubs, in-home live training, and wellness services made available with the click of a button. ClassPass, founded in 2013, is now the largest fitness network with over 8 thousand partners. Members pay a monthly fee to gain access to a subset or all of the partner fitness facilities. Peloton provides users cloud-based live streaming of cycling content, allowing for an immersive in home cycling class experience.

(3) Integrated club management platforms are growing in popularity as fitness & wellness providers seek to manage all of their operations within one integrated platform. As providers grow in size and volume of locations, they can manage each facility at the local level as well as maintain an aggregated view for a holistic perspective of their business health. Data and analytics are also playing a significant role as providers begin to depend on their platforms for insights and recommendations for management decision making.

Most Active Investors Focused On Wellness Technology:

Investor appetite for wellness technology startups continues to increase as the proliferation of mobile and wearable technology continues to grow. Interest is widespread across wellness management platforms, fitness marketplace providers, and consumer technology. Investors active in the space include Tiger Global Management, LCatterton, Thrive Capital, General Catalyst, Sequoia Capital, & Sigma Partners.

Thank you for reading our analysis on the Wellness Software Vertical. Make sure to check out the 2016 edition of Opportunities In Vertical Software for the full report.