Fitness startup Tonal seeking US$1.9b value with financing

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Home fitness business Tonal Systems is raising financing that would value the company at about US$1.9 billion, according to people familiar with the matter.

The fresh funding is expected to exceed US$100 million and would give Tonal the capital to continue growing as it deals with supply-chain challenges, said the people, who asked to not be identified because the matter isn't public. Tonal said it raised US$250 million at a US$1.6 billion valuation last year. 

Existing investors Dragoneer Investment Group and L Catterton are expected to participate in the latest round, the people said. The round includes terms favouring the latest investors, giving them priority to be paid first if Tonal was bought, one of the people said.

A spokesperson for Tonal declined to comment. Representatives for Dragoneer and L Catterton didn't immediately respond to requests for comment.

Tonal, which has raised money from well-known athletes including Serena Williams, Drew Brees and Mike Tyson, sells a home-workout station for US$3,495 that lets people connect virtually with a personal trainer. 

The financing comes as some investors recoil from home fitness, which boomed during the pandemic. Peloton Interactive has struggled as the home-fitness craze tapered off. Tonal, though, has continued to grow and is on track to generate more than US$100 million in sales in the next 12 months, 1 person familiar with the matter said. 

As tech valuations have plummeted, many private companies have been reluctant to raise money at depressed prices or less favourable terms. Some have opted out of fundraising altogether. Tonal is raising money now because it has capital-intensive business and wants the cash to expand, the people said. BLOOMBERG

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