Cult.fit Secures INR 84.5 Cr Funding to Propel Offline Expansion

The startup aims to expand its physical presence by opening more fitness centers across the country.

Healthtech startup Cult.fit has raised approximately INR 84.5 Cr (around $10.2 million) in a recent funding round led by existing investor Valecha Investments.

Valecha Investments contributed over INR 36 Cr to the funding, with additional participation from Gul Advani of Sun-n-Sand Hotels, who invested INR 28.26 Cr. The funding round also attracted investments from Extreme Brands LLP, L&K Wellness Services, and a group of individual investors.

Cult.fit's board passed special resolutions to issue 1,55,080 equity shares to Extreme Brands LLP and 15,92,157 Series C compulsory convertible preference shares (CCPS) to other investors.

The shares were issued at an issue price of INR 483.62 per share, resulting in a total funding of INR 84.5 Cr. The regulatory filings were made with the Registrar of Companies.

Founded in 2016 by Mukesh Bansal and Ankit Nagori, Cult.fit has secured over $650 million in funding from investors, including Accel, Temasek, Chiratae, Kalaari Capital, and others.

Angel investors such as Flipkart's Binny Bansal and actor Hrithik Roshan are also part of its investor lineup, per data from private markets data provider Tracxn. The latest valuation data indicates a valuation of $1.6 billion for the company.

In addition to its gym operations, the company manages various divisions, such as Sugar.fit, Carefit, Cultfit, and more.

Strategic Shift to Offline Focus

Cult.fit is undergoing a strategic shift from a tech-first gym chain to a more offline-focused model.

The startup aims to expand its physical presence by opening more fitness centers across the country. As per reports, the company terminated 120-150 mid to senior-level employees as part of its model change. The cost-cutting measures are also driven by Cult.fit's aim to achieve profitability and go public on stock exchanges within the next 12 months.

The startup presently incurs a monthly cash burn of approximately INR 15 Cr and aims to reduce it to about INR 10 Cr to demonstrate improved financial stability.

Cult.fit offers a diverse range of fitness programs, including group workouts at its centers, gym- and equipment-based workouts at partner facilities, and online training to cater to various fitness preferences.

Reportedly, Cult.fit demonstrated significant growth in its operating revenue, surging to INR 694 Cr in FY23 from INR 216 Cr in FY22. The startup also managed to narrow its losses, reducing them to INR 551 Cr in FY23 from INR 688 Cr in the previous fiscal year.

Despite the impressive revenue growth, Cult.fit remains cautious about its expenses. Employee benefits, the most significant cost center for the company, increased by 17.5% to INR 343 Cr.

This figure includes a non-cash expense of INR 86.3 Cr related to Employee Stock Option Plans (ESOPs). Additional costs, covering material consumption, advertising, IT, commissions, and legal fees, contributed to a total expenditure of INR 1493 Cr, representing a 50.2% increase from the previous fiscal year.

With support from existing and new investors, Cult.fit aims to tap into the growing demand for diverse fitness offerings and capitalize on its transition to a more offline-centric business model. The startup's ability to attract funding reflects investor confidence in its strategic direction and financial performance, setting the stage for continued growth and market prominence.

Healthtech Startup Funding Landscape

In a related development, just days back, IIT-Bombay-backed healthtech startup Neodocs raised $2 million (16.6 Cr) in a seed funding round led by Omidyar Network India. The latest infusion of funds will help the startup scale up its existing kidney care and UTI care kit and accelerate its plans to expand in international markets, including Europe, Australia, the Middle East, the Philippines, and the Americas.

In the same vein, Aarogya Tech, a healthtech startup based in the US and operating out of Bengaluru, has raised $1.8 million in a seed funding round. Hersha Hospitality Trust's Chairman Emeritus, Hasu P Shah, led the funding round. He will also be joining the board of directors at Aarogya tech, the startup said.