VANCOUVER — When Wilfred Valenta dreamed up the idea of a company that rents out small fitness studios by the hour, he believed the core customers would be travellers—people in a new city for a short period of time who wouldn’t want to fork over a big fee for a temporary gym membership. He still had that demographic in mind when Montreal-based Silofit opened its first location in the city in January 2019. But when the pandemic upended the world, Silofit benefited from a new demand for uncrowded fitness spaces.
Now the company is near closing a $10-million financing round that will help fund an aggressive expansion mostly south of the border, as well as further development of a digital platform it hopes will be a one-stop shop for personal trainers to run their businesses, connecting them to both customers and workout spots.
Silofit converts overlooked, small spaces into private fitness centres and rents them by the hour to people and trainers. The Montreal-based company’s model got a boost from the pandemic as gyms shut down and people searched for less crowded options. The company is now in the midst of a $10-million funding round, hoping to use the money for an aggressive expansion plan mostly in the U.S. and working on an app it hopes will be to fitness trainers what Uber is to drivers.
“What we’re entering is a new era of hybrid fitness,” said co-founder and chief executive Valenta in an interview with The Logic. He believes people now want to work out more at home with digital options and pay for specialized classes or individualized instruction outside the house. “I think that’s the new consumer behaviour coming out of the pandemic.”
The company conducts what Valenta called “real estate arbitrage” in major cities to find overlooked locations—in a basement, perhaps, or with a lacklustre view—to convert into fitness spaces it calls silos. People can rent the spaces by the hour to work out, and fitness trainers can book them to work with clients. A typical silo falls between about 500 and 1,000 square feet, and each houses a squat rack, weights and some type of cardio equipment. It costs the company about $50,000 to convert and equip each space.
Silofit now has eight locations, including some in Toronto, a city it first entered in January 2020 to test its concept in a more expensive market. It’s also expanded to a staff of 35, some part time.
That growth came as the COVID-19 pandemic changed how people could work out, with at-home Pelotons trumping studio spin classes. It created a need for private, well-equipped workout spaces as big gyms temporarily closed. Even if they reopened, some former clients preferred to stay away.
The pandemic has been “a double-edged sword” for the company, Valenta said. Yes, client demand rose and real estate prices dropped, but costs also increased, with more intense sanitization required, and silos themselves were ordered shut for a while. The company has been allowed to rent the spaces to kinesiologists, massage therapists and other wellness practitioners during the pandemic, but hopes to reopen to the public and fitness trainers in the near future. “We’ve gotten a high level of demand and a great degree of exposure because even people, users, regular users without trainers want to book the space to work out by themselves,” said Valenta.
Silofit wants to operate 15 locations by the end of March, and double that by the end of the year. Most of those will be in the U.S., which Valenta called the “largest fitness market in the world,” with a high-density population that has a big appetite for fitness. Valenta wants at least three silos in a major American city by the summer, with Chicago currently a top contender.
The expansion plan remains aggressive for subsequent years. “If you fast forward this business out two or three years … the hope is by then we’re in 10-plus cities with 20-plus silos per city,” said Shayn Diamond, a partner at Whitecap Venture Partners. That gives Silofit a path to becoming the main marketplace for fitness professionals and consumers, he said. Diamond met Valenta about two summers ago at an event and gauged that the entrepreneur ticked off all the boxes for what Whitecap looks for in founders: dynamic, passionate and driven. Whitecap invested in two of Silofit’s founding rounds.
The company has raised $4.6 million to date, said Valenta, most recently a $3.5-million round in February 2020. While Diamond wouldn’t disclose the exact amount of Whitecap’s investments, he said they came out of its seed-stage bucket, which is always under $1 million.
Silofit is now looking for an additional $10 million in venture capital. Valenta, who noted he couldn’t disclose much about the process underway, said the company has met with several investors. Whitecap expects to “be heavily participating” in the round as a “material participant,” said Diamond, which means an investment of somewhere between $3 million and $10 million, its typical range for Series A funding. Diamond said he hopes the funding round closes by the end of the second quarter.
Both men see the opportunity for Silofit to be more than a fitness-studio rental space, and more akin to a technology company. The funds will help the company further develop its app, which Valenta believes will be to a fitness trainer what Uber is to a driver. The app, called Silofit Pro, will be a “whole digital ecosystem for trainers and wellness professionals to run their business.” It will include the ability to process payments, sell workout programs and create schedules. Silofit also provides trainers with insurance, certification and other services. “It’s really this holistic ecosystem that we’re building.”
After Silofit brings all those functions under one digital roof and usage scales, said Diamond, it can turn on the marketplace. That means a function where people can find on-demand classes and trainers, letting them wake up on a Saturday with the vague idea of wanting to try a boxing class and finding an available instructor in their area for a silo booking that afternoon.
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Valenta maintains that Silofit provides fitness trainers more money than they would earn working at a traditional gym, as they pay less for the service than a gym would charge to use their space.
It’s not lost on him that many tech companies whose narratives revolve around helping independent contractors or small businesses face criticism for hurting the entities they claim to uplift. Food-delivery apps, for example, position themselves as increasing business for local restaurants, but tend to charge high commission fees in a low-margin business.
“The system has definitely been built to avoid that,” said Diamond. In the boardroom, he said, the team most frequently nixes ideas because they go against the company’s foundation of not looking, feeling, acting and smelling like a big-box gym. “The M.O. for this company will always be ‘How do you make it a win-win-win?’ So that the trainer’s making more money, the consumer’s paying less money, and Silofit is … a profitable business from a revenue perspective.”