Mindbody acquires ClassPass following US$500M investment

19 Oct 2021 --- Having secured a US$500m investment, US-based wellness technology platform Mindbody is acquiring ClassPass, a monthly subscription service that provides access to a network of fitness and wellness experiences. The funding comes from global investment firm Sixth Street and will support further growth and product development for Mindbody. In addition, the acquisition will create a one-stop-shop for both business owners and consumers.

“This acquisition and investment come at a pivotal time as the wellness industry works to rebound after COVID-19 closures and consumers realize that wellness is more important than ever,” says Josh McCarter, Mindbody CEO. “The acquisition serves as the bridge between consumers and wellness businesses. Wellness businesses will gain access to a wider consumer audience while consumers will have access to a wider variety of wellness experiences to choose from.”

The wellness industry is poised for a massive recovery and, together with ClassPass, Mindbody can better serve the industry and help wellness businesses get back on their feet, he notes. Additionally, the investment from Sixth Street, combined with the ongoing support of Vista Equity Partners, will allow Mindbody to continue to support business owners in the wellness industry.

Back to class post-COVID

The acquisition will integrate both teams, with ClassPass continuing to operate its app and website. ClassPass offers data-driven, machine learning-based SmartTools for business owners that help studios manage excess inventory and market unsold spots at a revenue-maximizing price.

Mindbody’s acquisition of ClassPass follows research and data from both companies that showed consumers are getting back to in-person wellness experiences as studios reopen. The research found that nearly 80% of consumers feel wellness is more important than ever. Additionally, several markets that have fully reopened are seeing bookings on the Mindbody platform rebounding to pre-COVID-19 levels, and ClassPass consumer usage is at 110% of pre-COVID-19 use for subscribers who have gone back to class.

Click to EnlargeMindbody is also getting up a fund to help grow business in the wellness industry.Studios on ClassPass typically experience a 30% increase in reservation volume and a 15% to 20% increase in revenue when utilizing SmartTools, the company says. Also, 50% of ClassPass members are new to boutique fitness upon joining, and 80% visit a new studio for the first time using the platform.

“As a long-time partner to Mindbody, we have seen ClassPass grow and evolve its consumer marketplace over the years. Together, Mindbody and ClassPass will help bring more people into wellness studios and better support the businesses on the Mindbody platform in their efforts to reach wellness seekers,” McCarter explains.

He adds: “When we combine our respective operations, we can create more seamless integrations and unlock new revenue opportunities for business owners using both services, while continuing to support all fitness, salon and spa businesses who choose to work with Mindbody or ClassPass.”

Enhancements have been made to Mindbody’s marketing automation tools to improve client acquisition and retention, as McCarter details: “We intend to put Sixth Street’s investment toward the continued development of our offerings, including further development of our fully integrated virtual wellness platform, and enhancements to Mindbody’s marketing automation tools to improve client acquisition and retention as businesses get back on their feet.” 

The investment will also support a new offering, Mindbody Capital, explains McCarter: “Mindbody Capital is specifically created for the wellness industry and offers our customers a cash advance, not a loan, which eliminates much of the bias women and business people of color disproportionately face when compared to traditional financing options. This offering is designed to give small business owners in the wellness industry access to financing to help them invest in and grow their business.” 

By Nicole Kerr, BPC Insights Contributing Journalist