More often these days, people are taking fitness and health into their own hands and relying less on fitness centers and health clubs. A recent study showed that over 80% of respondents intend to exercise at home even after gyms reopen. New exercise apps and home workout gear continue to make the living room workout easier than ever for consumers. Even before the pandemic, fitness centers and health clubs suffered from high attrition rates. These factors combine to leave gyms in less than favorable conditions. In order to attract and retain new members, gyms need new technology solutions and strategies.

One company taking aim at the problems of the fitness and health club industry is Gleantap.ai. At its very core, Gleantap serves as a provider of gym membership management software. The platform takes individual customer data and unifies it to create a “single view” of that customer. It then analyzes the data and works to optimize the customer’s experience. Examples provided by management include whether a customer seems to value discounts or if they prefer to receive text messages as opposed to other forms of communication.

The owners of fitness and health clubs can use this data to acquire customers through advertising and marketing. With information from a person’s social media accounts, financial records, and more, Gleantap can determine what kind of information to send out and when to do it. Their support services involve lead and appointment management, as well as related features. Analytics are also important because they allow for optimal customer targeting and communication. Pricing for companies begins at $99 per month for those with up to 1,000 members. For those with 1,000 to 5,000 members, pricing rises to $199 per month. Gleantap offers customized pricing for larger fitness and health clubs.

Since launching, Gleantap has succeeded in landing some major clients — including big players like Planet Fitness, Gold’s Gym, F45 Training, and more. By catering to these fitness and health clubs, the company is enabling a personalized experience for those clubs’ members. This should address the issues of customer attrition. Gleantap’s service also operates as a communications and marketing platform. This allows it to tackle the fragmented marketing infrastructure that exists in the industry today. But what about the allure of using digital aids and exercising from home? A personalized experience for fitness and health club members is surely a draw. But it cannot completely combat the paradigm shift that’s taking place in the industry.

Gleantap has responded by creating its own content portal. Earlier this year, COVID-19 devastated the global economy. Management attributed the freezing of 30% of its clients’ billings to the downturn the pandemic caused. Recognizing that a B2B strategy has its limitations, management launched a B2C feature as well. This is described by the company as a “Netflix-style” wellness marketplace. Through it, the company delivers content that is curated by trainers and health experts worldwide. The end users here are the tens of millions health enthusiasts across the globe. For this service, there are three pricing options. These plans vary from pay-as-you-go to unlimited content access (with a solid middle ground plan in between).

Gleantap has experienced attractive growth since its launch more than two years ago. The company has at least 324 client locations using its B2B offerings, and it’s working hard to grow its B2C business. As a result, revenue has expanded nicely. Back in 2018, the firm generated sales of just $131,171. This more than doubled to $392,318 in 2019. In its marketing materials, the company said that it achieved $740,000 in annual recurring revenue earlier this year. But it seems that COVID-19 has, indeed, caused a big blow to the business. In the three months ending in June of this year, sales averaged only $40,410 per month, or about $484,920 on an annualized basis.

On the bottom line, Gleantap looks as most investors might expect. In 2018, the business saw a net loss of $5,827. This loss expanded to $149,648 in 2019. Operating cash flow was actually positive in 2018 to the tune of $28,232, but in 2019 the company saw net outflows of $170,620. Specific numbers have not been given for all of 2020 so far. But management did say that in the three months ending in June, total costs were averaging $71,128 per month. 

Understanding Gleantap’s potential market is challenging. That is because of the rapid changes taking place in that space as well as how fragmented the industry truly is. One source pegs the global gym management software industry at about $185.8 million today. The current forecast calls for the industry to grow at a rate of 11% per annum through 2024, eventually hitting $313.2 million in size. However, Gleantap seems to fit at the intersection of several niches within the fitness and wellness space.

According to one source, there are around 70.2 million people served by fitness and health clubs across the US each year. Globally, there are an estimated 170 million people who are members of a health or fitness club of some sort. Gleantap claims that its B2B services touch 2 million people. Taking that figure and its annual recurring revenue of $740,000, this would imply a market opportunity in the US of $25.97 million each year. Globally, this would look to be about $62.90 million.

For its B2C offering, we could use the same figures. This implies a US-based opportunity of between $8.42 billion (using the $10 per month assumption) and $21.06 billion (a $25 per month subscription). Globally, these figures would be between $20.40 billion and $51 billion. However, consider that about one-third of adults in the US receive the recommended amount of physical activity every day, according to the U.S. Department of Health & Human Services. We are then able to apply that to households. With each third household having one subscription, the US opportunity would be between $5.14 billion and $12.86 billion. If we use the OECD’s high-income nations as a barometer for the global picture, then the opportunity grows to between $96.84 billion and $242.10 billion.

To continue growing the business, management is looking to raise capital. The goal, ultimately, is to raise up to $280,000, but they are willing to close the round with as little as $50,000. They are raising this capital through the issuance of SAFEs. For the first $100,000 in capital committed, the firm will allow the SAFE to convert subject to a valuation cap of $5.5 million. Any amount after this will be subject to a valuation cap of $6.5 million. In either scenario, the SAFE will convert at a 20% discount to the firm’s future valuation. In order to participate in this round, each investor must contribute at least $100 toward the business. As of this writing, $34,574 has been contributed to its raise.

At this time, there are two key members of the Gleantap team that run the enterprise. First is founder and CEO Sagar Babber. Prior to running this business, Babber served as the Director of Strategy & Growth for Mobile at First Tek Inc. Before that, he founded and served as the CEO of Snyxius Technologies, which was later acquired by First Tek. His prior experience also includes serving as the co-founder and Chief Architect at Collaborate Cloud. The other noteworthy individual is Shubham Sethi, Gleantap’s Head of Product. Before working at Gleantap, Sethi was a Product Management Lead at Athena Health. He also served at one point as the Principal Product Manager at Hive9, and prior to that he was a Product Manager for a firm called Lancope.

Based on all of the data available, we are rating Gleantap as a Deal to Watch. Management has already been successful in demonstrating that there’s demand for what they are offering. They have seen revenue grow at a nice clip during the firm’s short life as well. While the business is generating net losses and cash outflows, these negatives are not all that large considering the size and stage of the firm. Though the market is fairly opaque, it looks to be worth many billions of dollars.

Gleantap has the potential to capture a sizable chunk of this space if it can continue to demonstrate its value to customers. The B2C component of the firm is especially interesting as that seems to have the most potential. The valuation of the business — relative to where its traction — is also reasonable. The only bad thing is the hit the firm said it’s taking as a result of the COVID-19 pandemic. This suggests that at least some clients view the service as a valuable add-on, but not as invaluable. If the pandemic’s effects continue for an extended period of time, this could cause the business some pain. But when you consider that even the pandemic must eventually pass, the long-term trajectory of the business looks promising.