Translation and Commentary: Keep, Chinese Fitness App Raises $80M to be the “Solution to Exercise”

On Tuesday, Keep, a Beijing-based fitness tech company announced an $80 million USD Series E at a $1 billion USD post-money valuation. The round was led by a new investor, Jeneration Capital, with participation from existing investors GGV Capital, Tencent, Morningside and Bertelsmann. This transaction marks Keep’s entry into the Unicorn club, making it the only Chinese fitness tech company to hold the title. 

Founded in 2014, Keep started as a mobile fitness app offering instructional videos on how to exercise and has since added features such as exercise planning and social networking. Over the last 2 years, Keep has doubled down to expand its offline presence, opening up physical gyms in major cities and selling connected treadmills and bikes for home exercise. The playbook looks a lot like Peloton, which is trying to connect users online and offline with a full suite of exercise products. 

The latest capital raise comes with the declaration of a new mission, to become the “Solution to Exercise”. Keep believes existing fitness brands don’t do enough to actually get people to exercise. Keep thinks its offerings create happy user exercise experiences, which encourage users to keep exercising, and the cycle continues. 

Keep’s consumer business model is tough here. It’s a free app to download and revenue is likely coming from ads, in-app product purchases, gym memberships and equipment sales. As it invests in its offline presence, the company will face all the challenges that come along with adding physical assets to a tech business. The capital intensive process introduces new risks such as lower margins and inventory. Web and mobile app companies that expand to sell physical equipment have had mixed market reactions, as we’ve seen with the skepticism around Peloton. Most businesses of this nature need to secure high quality asset-backed debt facilities to continue operations.

I’m interested to see how Keep progresses as we emerge from the global pandemic. 

Below is my translation of an article originally published on Chinese tech news site, 36KR. This translation includes exclusive information that has not been featured yet on English-language news sources. 

My translation below:

Transaction Details

36KR’s exclusive take: Fitness tech company, Keep completed a $80 million USD Series E led by Jeneration Capital. The exact valuation has not been confirmed, but reports are estimating the post-money valuation was over $1 billion USD, which makes it the first Chinese fitness tech company unicorn and the first one to reach a Series E funding round. 

Keep confirmed with 36KR that the Series E was led by new investor Jeneration Capital with participation from GGV Capital, Tencent, Morningside VC, BAI fund and other existing investors. Prior to this, Keep completed 6 rounds of VC funding totaling $187 million USD, and most recently raised a $127 million USD Series D led by Goldman Sachs. 

Company Background

Keep was founded in late 2014 by fitness enthusiast Wang Ning (王宁) and targets a broad consumer audience by offering free course content, easy to use products, and a user-friendly interface. Amidst a big wave of new internet apps, Keep quickly emerged as the most well known of the fitness apps. 

Keep’s early user growth was extremely successful. Serving as both an exercise and social networking app, Keep reached 1 million users just 105 days after its launch, and hit 100 million users in August 2017, 921 days after launch. 

A Visit from Tim Cook

In March 2017, Apple CEO Tim Cook visited Keep’s offices as part of his tour around leading Chinese internet companies. Keep CEO Wang Ning gifted Tim Cook a yoga mat that said “80,000,001”, meaning Tim was Keep’s 80,000,001st user. In the same year, Ning Wang was featured in Forbes China 30 under 30 list. 

Recent Developments

After building up a strong user base, Keep started to expand from online to offline, from mobile app to connected devices. “In my opinion, Keep is not just a fitness app”, Wang Ning said in a 2018 interview with 36KR, “Keep is a brand that manages people’s lifestyles”. 

In the beginning of 2018, Keep opened its first physical gym called Keepland in Beijing’s China Trade Center building. Around the same time, it also launched its connected devices business, KeepKit, aimed at selling exercise products for the household. The first product was a treadmill and Keep has since introduced a connected smart-sensor bike. 

Keep has high hopes in its smart-sensor bike. According to reports, the smart bike will connect to Keep’s content and track user exercise data. Keep wants to use content subscriptions and live streaming as a way to enhance users’ home exercise experience and further extend its online presence. These initiatives all align with Keep’s new goal (announced in conjunction with this capital raise) of becoming the “Solution to Exercise”. 

Company Vision: The Solution to Exercise

Keep’s business model was rooted in offering course content to users, and gradually evolved to add check-ins, sharing, exercise challenges, product sales, and general exercise coaching to make it a one-stop-shop for all exercise services and the complete “Solution to Exercise”. Keep wants to use capital from this round to help integrate all business units and drive strategic direction towards becoming the complete “Solution to Exercise" for users. 

The “Solution to Exercise” refers to Keep’s idea that many traditional fitness brands provide fitness awareness and equipment, but that doesn’t necessarily get customers to exercise. Keep wants to use its content, services and social networking to actually get users “moving”. 

Below is Keep’s diagram of the exercise lifecycle. It shows that users who engage with Keep have happy exercise experiences, which give users mental affirmation, and encourages them to continue exercising. 

In addition, Keep still views its content as the foundational product and core competency. In the early days, Keep produced professionally generated content (PGC), then opened it up to professional user generated content (PUGC), which has gained huge popularity. The company also plans to explore fitness copyrights overseas to build up competitive barriers. 

Financial Metrics

According to reports, Keep’s online business revenue increased 286% in 2019 over 2018, and offline consumer products revenue increased 300%. 

Recent Layoffs

Keep is known in China for its positive company culture and well-designed products. However, in the last 6 months, Keep has also started to stress “Time is Money, Efficiency is Life”. (Author note: this is a slogan in China that emerged during the 1980s economic reform to promote corporate capitalist behavior.)

In October 2019, Keep went through a round of layoffs as part of a business reorganization that affected 10-15% of the company’s 800 employees. At the time, Keep gave a response to the layoffs: the layoffs made the organization more efficient and were necessary for the company’s long term development. Keep said it was in a high growth period, so the employees who were laid off belonged to underdeveloped business units and overlapping job functions. 

Conclusion

Keep’s overall business model has received validation from the capital markets, as proven by its recent Series E raise.

According to Keep insiders, Keep’s user base has already exceeded 200 million and the company has collected over 3.6 billion user behavioral data points. Following the Series E, Keep will continue to develop its content and products, and ultimately seeks to complete the entire fitness lifecycle. 

About the Author, Bonnie

If you enjoyed this article, please subscribe to Bonnie's Amplified Tech Blog to get the latest articles directly in your inbox. Bonnie Young runs the Amplified blog. She shares her insights on market trends and interviews founders that are shaking up the tech scene. Bonnie is currently looking for a growth equity or VC role in the Bay Area.