STRAVA Seeks New Funding Sources close to STRAVA say that the sporting social network company is looking to raise $150-$400m and is seeking to raise those funds from new, private investors which would then value the company at $1 billion, significantly more than one company’s estimate of its worth at $350m. Key STRAVA Stats, Facts & Guesses Privately owned and relatively secretive about its key financial performance stats Investors include: Sequoia Capital, Go4it, Madrone Capital Partners and Jackson Square Ventures STRAVA has already had 6 rounds of funding but so far only raising $41.9m Bloomberg quotes significant recent growth: STRAVA now has 68 million accounts, up from 50 million in February 2020 It’s not known how many users are paying subscribers. A sensible guess would be significantly less than 10% of total accounts In 2019 some estimates put STRAVA as growing by about 1 million new users a month. CV-19 and the associated boom in cycling has caused this rate to significantly increase. Sources: Bloomberg, Catalano and others Key Hurdles, Opinion A price tag of $1bn puts STRAVA beyond the financial reaches of many sports-related companies, especially in the current CV-19 climate. Garmin could afford to buy STRAVA for cash even at that price. I just don’t think they have any incentive for that other than to prevent it from falling into competitor-friendly hands. So then you really have to question WHAT ON EARTH is the exit strategy? Other than a flotation, it’s not obvious. There could be an exotic buyer like Facebook, Nike, Google or Apple but I just don’t see that happening either. That leaves the most obvious route for Strava as a formal IPO/flotation. This would certainly open up STRAVA’s books for detailed scrutiny and even though Bloomberg says STRAVA is currently profitable, I strongly doubt they are making that much money. A subscription model has value for STRAVA and, to a degree, will work. However, it’s very unlikely to deliver a revenue stream which alone would justify a $1bn price tag. That’s GOT to come primarily from ads if STRAVA remains in a similar form as at present. The original founders are on the record as saying they don’t see advertising fitting into the business model. In my opinion that is their hidden exit strategy — at some point, they have to be bought out and voluntarily leave. Yet, even STRAVA’s current subscription strategy is tactically flawed. They are essentially putting ALL meaningful functionality behind a paywall. Fine. That will encourage some to subscribe. BUT it will cause a great many others to simply pack up shop and leave and take their data with them. And that’s STRAVA’s other problem — they need plain old users for that elusive future ad strategy, and user data to make many of STRAVA’s features meaningful like segments, leaderboards and heatmaps. So there we have it: Owners bought out and leave, possibly as soon as the next round of funding New investors change strategy to retain a ‘sensible’ free-STRAVA, introduce ads and bolster the subscription service features STRAVA becomes an ad company-cum-social media platform mixed with a bit of cycling data An IPO in a couple of years time Longer-term they are subsumed into one of the other ad companies Something like that… ← Back to the Strava Hub
