Business Blog: Ladder up

How strength training startup Ladder plans to more than double users of its app in a year

December 10, 2024

Despite all odds, I have become a routine person. Nearly every morning during the workweek, my alarm goes off at 6 a.m., and I press snooze twice on average. I feed the dog. I change. I eat a handful of dry Cheerios or a banana, then I head to the gym—liquid chalk in my bag—and I lift weights.

This all began five months ago—on July 8—when I stumbled upon a strength training app called Ladder, where users join one of 17 teams to get curated progressive overload training programs that run in six-week cycles. It felt like having my own personal trainer to customize my workouts, then be in my ear to give me audio cues, and help with my form. I've never loved going to the gym so much until now, and I've been surprised at how much weight I've been able to move since I started using it.

It's hardly just me who’s a fan. Austin-based Ladder is close to hitting 150,000 paid monthly or annual subscribers this month—tripling its user base from this time last year. The startup has raised $30 million over three formal funding rounds, and it recently inked an interesting debt deal with General Catalyst for $90 million in marketing spend.

But perhaps most telling is that, when Peloton launched its brand-new strength training app with a spew of press reports just last week, it looked uncannily like Ladder—so similar that Ladder released an entire ad campaign about it, revealing that Peloton product, designers, and engineers had logged 1,500 training sessions on the Ladder platform before releasing their new audio-only platform. (Peloton did not respond to a request for comment for this story)

"With this specific situation, we felt it warranted a creative response from our team—and we’ve had a lot of fun with this campaign," Greg Stewart, CEO of Ladder, told me over the phone on Monday about his startup's social media campaign to call out their new rival.

For context, Ladder has 17 fitness coaches, who each curate training programs and record audio to guide users through each workout. They each have a chatroom where they can answer questions, and where users can talk with one another. Ladder now has more than a dozen other employees, nearly all of whom are based in Austin.

Meanwhile, venture capitalists have been proclaiming from the rooftops that consumer is "dead" and moving their dollars elsewhere, but Stewart says he has had to tune out a lot of noise in recent years.

When Ladder first launched during COVID, during the peak of the venture boom, Stewart said there was the opposite problem: He had to be careful about taking too much capital too early. Now, there's been a significant pullback in consumer investments. "I think there were a lot of investors who didn’t think we’d get to this stage right now," he said. But he says Ladder's initial success over the last four years has been about two things: Building a great product that retains customers, and organic growth. "You have to have a product that people are excited to talk about and are introducing to their friends and their family," he said. "They can’t just rely on paid media or investing in growth—that’s a risky strategy long term."

Stewart was short with me on some of those details. He wouldn't go into the company's retention rates and he wouldn't break out user referrals—so it's hard to say whether Ladder is excelling in those metrics.

But you can back into some of Ladder's financials yourself. With 150,000 users, Ladder would be generating somewhere between $27 million to $54 million in annual revenue, depending on how many of its users are paying annually (which is cheaper than its per-month plan). And Stewart is aiming to have 400,000 members by start of 2026, which could more than double those figures. Stewart also explained to me how some 80% of its users, like me, weren't using a fitness app before joining, and 50% had never tried one at all—meaning that the company has managed to tap into a gym-goer market that competitors haven't yet been able to reach. Ladder also plans to open a new revenue stream next year, too, when it launches a high-performance apparel line.

But, true to any consumer startup, Ladder is also spending heaps of cash on attracting new customers. In its unique, $90 million deal with General Catalyst, the investment firm has agreed to pay 80% of Ladder's anticipated sales and marketing spend each month to pre-fund anticipated customer acquisition costs. As those prospects become paying customers, Ladder will repay that capital with the revenue it is generating from those customers.

As the app continues to grow, Stewart says his team has been adding efficiencies on the backend, so that its coaches can manage their growing chatrooms and the influx of new people using their programs. In its proprietary software system, which is called Apollo and is what coaches use to put together their workout plans, coaches can use AI to understand the sentiment of their teams each day in the chatroom, identify top questions being asked, and find users that haven't been responded to recently to save them time. Ladder is also planning to launch separate chatrooms for people who are joining a new team at the same time, or launch their own small chat groups.

"We think we’re just getting going," Stewart says.

In other news…Term Sheet's own Allie Garfinkle interviewed new Stability AI CEO Prem Akkaraju and one of their new investors at our Brainstorm AI conference happening right now in San Francisco. You can read about the conversation here.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Nina Ajemian curated the deals section of today's newsletter.

VENTURE DEALS

- Tasca Therapeutics, a Boston-based small molecule drugs developer for cancer treatment, raised $52 million in Series A funding. Regeneron Ventures and Cure Ventures led the round and were joined by Invus Group.

- Astrix Security, a New York City-based non-human identities security platform, raised $45 million in Series B funding. Menlo Ventures led the round and was joined by Workday Ventures and existing investors Bessemer Venture Partners, CRV, and F2 Venture Capital.

- LambdaTest, a San Francisco-based cloud-based unified testing platform, raised $38 million in funding. Avataar Ventures led the round and was joined by Qualcomm Ventures.

- Aampe, a San Francisco-based AI agents developer for consumer apps, raised $18 million in Series A funding. Theory Ventures led the round and was joined by Z47.

- Biomemory, a Paris-based DNA data storage company, raised $18 million in Series A funding. Crédit Mutuel Innovation led the round and was joined by Blast, Paris Business Angels, Sorbonne Venture, existing investor Bpifrance, and others.

- Next Sense, an Amsterdam-based real estate decarbonization solutions platform, raised €11.5 million ($12.2 million) in Series A funding. ABP and ETF Partners led the round and were joined by existing investors Edge, SHAPE Capital, and Timeless Investments.

- GovSignals, a New York City-based government contracting AI automation platform, raised $5.5 million in seed funding from Unusual VC.

- Mainframe, a San Francisco-based productivity software developer, raised $5.5 million in seed funding. Peter Boyce II and Lachy Groom led the round and were joined by Alana Goyal, Akshay Kothari, Weekend Fund, and others.

- Sekai, a Palo Alto-based AI-powered storytelling platform, raised $3.1 million in seed funding. Hashed led the round and was joined by a16z CSX, Azuki, Orange DAO, and Zypsy.

- MoldCo, a Boston-based mold toxicity care, treatment, and testing provider, raised $3 million in pre-seed funding from Starship Ventures, SALT, Conscience VC, and others.

- Rowan, a Boston-based molecular design and simulation tools developer, raised $2.1 million in pre-seed funding from Pillar VC, AI Grant, and angel investors.

PRIVATE EQUITY

- Recognize acquired a majority stake in SDG, a Norwalk, Conn.-based cybersecurity services provider. Financial terms were not disclosed.

EXITS

- Arthur J. Gallagher agreed to acquire AssuredPartners, an Orlando-based insurance broker, from GTCR and Apax Partners for $13.5 billion in cash.

IPOS

- Anteris Technologies, a Toowong, Australia-based artificial heart valves developer, plans to raise $100.3 million in an offering of 14.8 million shares priced at $6.78 on the Nasdaq. The company posted $3 million in revenue for the year ending Sept. 30, 2024. L1 Capital, Perceptive Advisors, Stephen Silver, and Sio Capital Management back the company.