This story was updated with additional information on Monday, Dec. 28, 2020, 5:17 p.m.
Chattanooga-based Echelon Fitness has raised $65 million of financing from Goldman Sachs Growth with participation from North Castle Partners to spur the company's expansion goals.
Lou Lentine, Echelon president and chief executive, said the new funds will go into such areas as product development, technology, international expansion, ad campaigns and celebrity collaboration.
For example, he said, ads and classes will soon feature actor Mario Lopez, a collaboration that includes fitness classes and cycling rides with him as the coach.
"We are excited by the trust and commitment we received from our new added investors," Lentine said. "Our goal is to be the leader in connected fitness in the USA and globally."
Echelon, begun by serial inventor Lentine in 2017 to provide what he called a more affordable stationary bike with the tracking and interactive features of Peloton and other rivals, has seen sales soar amid the pandemic.
It now offers a line of connected products that includes stationary bikes, rowers, fitness mirrors, and treadmills along with an app experience that allows members to participate in live and on-demand classes.
The new equity investment is one of the largest rounds of funding ever for a Chattanooga startup. Earlier this year, Chattanooga-based provider of freight data and analytics FreightWaves raised $37 million. That put that company's total capital raised at $75 million. Two years ago, Bellhops raised $31.4 million in additional equity, the latest in more than $50 million of equity funds raised by the Chattanooga-based moving company.
Last year, Connecticut-based private equity firm North Castle Partners made an undisclosed investment in Echelon. That firm's portfolio of prior and current companies includes brands such as Equinox, SmartyPants Vitamins, Full Swing Golf, Octane Fitness, and Naked Juice.
Goldman Sachs Growth is the dedicated growth equity team within Goldman Sachs, the New York-based global investment banking, securities and investment management firm.
Stephen Kerns, a member of GS Growth, said in a statement that the firm is "incredibly impressed by what Echelon Fitness was able to accomplish with a very small amount of capital raised to date."
He said GS Growth is "excited about their omni-channel and multi-product offering that enables a broader reach to retailers and consumers alike."
Jon Canarick, managing partner of North Castle Partners, said he was excited by the opportunity at Echelon to offer "a great product at competitive prices before the global pandemic set in."
"We have experienced explosive growth and we are very excited to have Goldman Sachs invest in the business alongside us," he said.
Lentine said there are multiple investors in the company, and he's still the largest in Echelon. But, he said, he has sold his controlling interest "for the benefit of growing the business and creating an amazing experience for our members. The new valuation increased my stock value tremendously."
Lentine said that among uses for the new funding include:
* Fitness app platform and experience. Lentine said the company is investing heavily in its tech team to build an even better fitness app experience with added hiring to create a more robust platform for members.
Also, Echelon is opening new offices and production facilities in Chattanooga, Orlando and Miami, he said. Earlier this month, Lentine said the company is taking two floors in Liberty Tower in downtown Chattanooga where it will put its headquarters.
* Ad campaigns and media. Plans are to significantly increase its media spending and brand advertising, Lentine said. He said Echelon has launched its new marketing campaign with its first ad agency partner, DiMassino Goldstein.
* Product development. The company CEO said plans are to launch many new products in 2021 in both the Echelon and entry-level brand Fit Nation.
"We are working with our partners at Villency Group, who developed the Peloton and Soul Cycle bike, to create the world's most innovative and best-designed products," he said.
* International expansion. Classes will begin being filmed in Colombia, Germany and France in the coming month with increased European and South America distribution, Lentine said. The company also is reviewing opportunities to launch in Asia, he said.
* Celebrity collaborations. "Our members will love getting to know Mario on a personal level, while he leads workouts," Lentine said about the "Saved By The Bell" television show star.
He said the investment bank Piper Sandler acted as exclusive financial advisor to Echelon in the most recent funding round.
Contact Mike Pare at firstname.lastname@example.org. Follow him on Twitter @MikePareTFP.