Fitness Tracking Startup Strava Raises $110 Million in Series F Round
Strava is a San Francisco-based fitness tracking app and social platform for athletes. The firm raised $110 million in a Series F financing round led by private equity firms TCV and Sequoia Capital. Other participants in the round included Dragoneer Investment Group, Madrone Capital Partners, Jackson Square Ventures, and Go4it Capital. This latest Series F fundraising round puts the startup’s valuation at over $1.5 billion.
Strava has seen a significant uptick in user demand during 2020, partly driven by pandemic lifestyle changes. The company added more than 2 million new users, or “athletes” as Strava calls new users, to its platform per month in 2020. In comparison, in 2019 Strava added around 1 million athletes per month to its platform. Strava currently has over 70 million members spanning 195 countries.
The changes brought about by the COVID-19 pandemic has led to an increased emphasis on outdoor exercise. The community interactions facilitated by the fitness tracking app has contributed to its surge in popularity. In the midst of widespread lockdowns, people have increasingly sought out online support communities focused on shared passions and hobbies. Vertical social networks such as Strava that cater specific interests have benefited during the pandemic.
Founded in 2009 by Michael Horvath and Mark Gainey, Strava’s original focus was on cycling. The company soon enough expanded the focus of its GPS data tracking and social networking platform to also encompass running. Today the fitness tracking app tracks more than 30 types of sports and fitness activities. The most popular of them are still cycling and running.
Michael Horvath has played a pivotal in driving user growth. He served as CEO at the company’s inception until 2013 and then returned to be CEO again in November 2019. By focusing more on innovation and connecting athletes globally, Horvath helped Strava’s fitness tracking userbase grow by 35% in just six months. Mark Gainey also returned to Strava in November 2019 as executive chairman after time away from the company. James Quarles, a former VP of Instagram Business, served as CEO of Strava from 2017 until 2019. During Quarles’ time at the helm of Strava, Horvath and Gainey continued to remain close with the company.
The return to leadership of the company’s co-founders after time away has precedent in Silicon Valley. Jack Dorsey, the co-founder and early CEO of Twitter, returned to Twitter as CEO again in 2015. He had spent seven years away from the company. More famously, Steve Jobs spent a decade away from Apple before coming back to transform the company to new heights.
Freemium Model for Fitness Tracking
Strava uses a freemium model. It provides the basic service free of charge. Only premium features require payment. In Strava’s case, it operates a subscription service that provides users with more sophisticated mapping, metrics, and goal setting features. For $5.00 per month, users can access advanced performance metrics. Additional features are real time location sharing with family and friends, training dashboards, and analysis of past training patterns.
The startup has gone through a number of venture capital-backed funding rounds over the past decade. It raised its Series A and Series B rounds in 2011. Then, it closed a Series C round in 2013, led by Sigma Partners and Jackson Square Ventures. This was followed by a Series D round in 2014 and a Series E round in 2017. Its recent $110 million Series F round represents a significant milestone for the fitness tracking company.
The company’s San Francisco headquarters are home to around 200 employees. Aside from its main hub in Silicon Valley, Strava also has locations in Denver, Hanover, New Hampshire, and Bristol in the United Kingdom. Its third, and strategic, U.S. office opening was Denver in 2018. Stave joined the trend among startups to expand operations to this growing tech hub. The growing pool of tech talent attracted to Denver in recent years has earned it the nickname “Silicon Mountain”.
Privacy Advocates Have Concerns
Fitness tracking apps that rely on GPS tracking technology like Strava have drawn criticism from privacy advocates. The Strava app automatically shares your fitness data with other users unless you explicitly opt out. It aggregates all of your activity to the Strava feed, even when you are not necessarily exercising. The implication is that your location data is being tracked at times of the day when you are not exercising. That data could enable someone to figure out where you live, work, and places you commonly frequent.
Users have the option to establish “Privacy Zones” within the app. This will prevent certain parts of your exercise route from being disclosed. For example, you could conceal your home address from which you begin and end your runs. Users also can anonymize certain pieces of fitness tracking data. At the same time, they are still able to keep their data public on leaderboards.
The tradeoff of adding enhanced privacy settings and sharing less data is that it makes the social networking experience less effective. Additionally, even data that you have opted to anonymize can be sold by Strava to third parties. For example, Strava sold aggregated and anonymized location data of users to cities working on projects to improve bike lanes.