Athletes, celebrities, and entertainers are increasingly investing in health and fitness companies.

Coming full circle, celebrity fitness instructors and wellness influencers are becoming highly sought-after investors and founders in their own right.

Pay-to-Play

From upstart to growth-stage, every company is searching for unique ways to boost growth and lower customer acquisition costs.

Easier said than done, distribution is a pay-to-play game dominated by gatekeepers like Apple, Amazon, Google, and Facebook.

• Apple’s App Store grossed more than $64B in 2020.
• Amazon, Google, and Facebook collect 50%+ of all US digital ad dollars.
• In 2021, digital media is expected to reach 61% of global advertising spend.

As Gartner vice president Andrew Frank put it: “It’s all about the data, and the fact that the data is concentrated in these particular companies gives them tremendous power.” 

While these platforms work, brands risk becoming overly reliant on paid channels, making it difficult to scale efficiently or achieve profitability.

• Both e-commerce investor Clearbanc and Social Capital CEO Chamath Palihapitiya have said startups spend 40% of every dollar of venture capital on Google and Facebook ads.

Star Power

Beyond endorsement deals, brands like Hyperice, Tonal, and WHOOP are running the athlete-as-investor playbook to perfection.

From Issue No. 99, The Athlete VC:

“Companies tap athletes for awareness, distribution, and relevance in culture… helping brands avoid the tolls levied by platforms like Google, Amazon, and Facebook.” 

Getting in on the action, celebrities and musicians are investing in fitness and wellness brands.

Instead of renting out their time or likeness, entertainers are backing startups that align with their personal brand and resonate with their fans. With incentives aligned, celebs can authentically rep a product, benefiting in the long-term upside.

Jay-Z has invested in at-home fitness companies CLMBR, LIT Method, and recovery tech brand Therabody, as well as Factor’s healthy meal delivery service and Impossible Foods.

Kevin Hart counts investments in supplement maker Nutrabolt, connected rower Hydrow, activewear label Fabletics, beverage brand Super Coffee, and Therabody, among others.

Mark Wahlberg is an investor in the F45 Training franchise, AQUAhydrate’s electrolyte water, and vibration training company Power Plate. He also co-founded Performance Inspired supplements and MUNICIPAL sportswear.

On the flip side, a number of health-focused companies like Super Coffee, Liquid I.V., and Flow Alkaline Spring Water have effectively leveraged high-profile investors to their benefit.

The New Guard

As attention fragments across different devices, platforms, and personalities, brands are being forced to adapt.

Ignoring ads and tuning out commercials, younger generations are increasingly drawn to content creators on YouTube and TikTok. Gen Z doesn’t fawn over mainstream celebrities or athletes—they’re all in on influencers.

As a result, the balance of powers is shifting, and creators are cashing in.

More than brand deals, creators are collecting equity stakes in exchange for their co-sign while also investing in startups and launching wholly-owned companies.

Josh Richards. With more than 36M followers across various social media, including 24.9M on TikTok, 19-year-old Josh Richards isn’t doing sponsored posts; he’s starting companies (like Ani Energy) and investing in startups. In March, Richards partnered with Goldman Sachs investment banker Marshall Sandman to launch Animal Capital, a Gen Z-focused investment fund.

Jimmy Donaldson. Better known as MrBeast, Donaldson has amassed 91M subscribers and 13B views across his six YouTube channels, making this 23-year-old one of the most popular creators on the planet. Donaldson employs upwards of 50 people to execute elaborate videos, build mobile games, and operate a ghost kitchen chain called MrBeast Burger. He’s also an investor.

Worth mentioning, Donaldson’s management company, Night Media, has innovated on the talent representation model, launching a $20M venture fund while also helping creators stand up owned and operated businesses.

Full Circle

Following a blueprint put forth by the likes of Richards and Donaldson, the creator class is reshaping fitness and wellness.

• The influencer marketing industry is on track to be worth $15B by 2022.
• There are 50M+ independent content creators, curators, and community builders.

From bootstrapped to a billion-dollar-plus brand, Gymshark credits influencers for its rise to prominence. More than marketing, when Thrive Market was turned down by more than 50 venture capital firms, the online grocer raised money from health and wellness influencers like bloggers Mark Sisson and Katie Wells, aka Wellness Mama.

Meanwhile, other influencers have made the jump from social media to entrepreneurship.

Kayla Itsines of SWEAT may be the best example — the app earns upwards of $100M/year in revenue as part of an exercise empire worth much more.

Far from an isolated case, Joe Wicks went from Instagram and YouTube star to author and investor. Blogilates founder Cassey Ho started an athleisure brand and recently launched a line of fitness equipment at Target. And US Army veteran Nick Bare leveraged YouTube to build the Bare Performance Nutrition supplement brand.

Looking Ahead

As celebrity instructors like Peloton’s Cody Rigsby (700K Instagram followers) and fitness influencer Demi Bagby (2.3M Instagram/13.8M TikTok/200K YouTube) harness the attention of loyal fans, brands will have to rethink their strategies.

Armed with more leverage than the brands themself, celebrity instructors could become investors in or co-founders of the next Peloton. Similarly, personalities that started on social media, like Bagby, Adriene Mishler, Lita Lewis, or Melissa Wood-Tepperberg, will go on to create or back a competitive product.

Meanwhile, there’s an opportunity for companies and investors to partner with or invest in fitness creators earlier in their development. For instance, imagine a Night Media-style management company providing resources to fitness and wellness creators.

Punchline: In the battle for instructor talent, user growth, and retention, the new guard is a force to be reckoned with.