FitnessKeeper Chases Down $400,000 in Seed Funding
FitnessKeeper, the Boston startup behind the GPS-based RunKeeper iPhone application used by thousands of runners to track and share their outings, has raised its first round of seed funding from a group of local angel and venture investors.
It’s a small amount of capital by the standards of many technology startups—just $400,000—but FitnessKeeper founder and CEO Jason Jacobs has big plans for the money, including porting RunKeeper to more devices and expanding the company’s mobile application into an entire cross-platform fitness ecosystem.
“There are some real proof points we think we can hit with this money so that we can be in position to either never need another dime, or to raise another, much larger round from a position of much greater strength,” Jacobs tells Xconomy.
The funding comes from Cambridge, MA-based LaunchCapital (also an investor in Xconomy) as well as a group of individual investors. They include Don McLagan, the former CEO of Boston-based Compete.com; Dave Balter, the CEO of Boston-based BzzAgent (where FitnessKeeper has rented office space); and Will Herman, founder of Viewlogic.
When FitnessKeeper was founded in May, 2008, investors were scarce, so the company focused on building its first application rather than fundraising, according to Jacobs, a Babson College graduate. The company stayed extremely lean. Jacobs was long the only full-time employee, and he paid developers in equity rather than cash. (For more background on the company, see our profiles from January and April of this year.)
But gradually, revenues from sales of the RunKeeper app through the iTunes App Store—the “Pro” version of the app goes for $9.99—grew to the point that the startup was able to hire three additional full-time employees and still stay cash-flow-positive, Jacobs says. And that meant the time had come to decide how fast the company should grow from here on out.
“We certainly could have powered through and not raised any money, but we see clearly that there’s a window of opportunity,” says Jacobs. “We’ve carved out a leadership position in this burgeoning space around mobile fitness. Going faster, accelerating our development, building out the system, getting the business model in place, and getting onto some additional platforms beyond just the iPhone can make the position we have much more defensible.”
So one big goal is getting RunKeeper-like applications ready for mobile devices such as Android, Palm, and Blackberry smart phones. Jacobs also wants to expand FitnessKeeper’s online presence so that users can track other types of fitness activities, and so that the company can create additional revenue-generating services.
“When people look at Runkeeper, they see a very successful iPhone application, and it is, but to us it’s always been part of a much bigger system,” Jacobs says. “We want to show that the iPhone app is just one of the inputs to the system.”
FitnessKeepers’ new investors “all bring something significant to the table beyond just the money,” Jacobs says. Balter and McLagan have been two of the startup’s main advisors since its earliest stages, while the partners at LaunchCapital, including founder and managing director Elon Boms, bring “some really deep relationships and knowledge,” Jacobs says. “I almost think of Launch as a ‘super angel’ that can come in and play alongside the angels, without the downsides of being a big fund.”
Boms, who is traveling today, sent Xconomy a few words of praise for Jacobs and FitnessKeeper via e-mail. “LaunchCapital is excited to be a part of the FitnessKeeper team,” Boms writes. “Jason Jacobs has proven himself to be a leader on the East Coast in the mobile app development space, and is now primed to leverage FitnessKeeper’s large, active user base to develop a widespread personal wellness platform technology. LaunchCapital has kept a close eye on the personal wellness industry and believes that FitnessKeeper’s impact, in their market, has been far greater than competitors in the field. This impact is directly related to the value that the RunKeeper product delivers to its customers and will translate well into a broad mobile and Web platform.”