Powers Gymnastics raises nearly $17M in Series A funding round
Mar 20, 2023
By Chris Smith
Powers Gymnastics has quietly assembled the largest network of USA Gymnastics-certified gyms in the U.S. Now, the company is primed for even further expansion: Powers Gymnastics has raised a $16.8M Series A funding round led by the Tennessee-based Relevance Ventures. Co-founders Jill Powers -- a former competitive gymnast -- and Trevor Thompson acquired their first gym, Phoenix-area Estrella Gymnastics, in 2019. The pair envisioned a new, more welcoming model for youth gymnastics, an industry that has typically devoted the vast majority of its resources to a small percentage of elite-level competitors. “One of the problems with the industry is that the focus of competitive gymnastics is almost exclusively on extremely high training hours, like 25 or 30 hours a week,” said Thompson, Powers Gymnastics’ CEO. “There’s not anything like a youth travel soccer league type of program for kids. It just doesn’t exist.”
LARGER FOCUS: With Estrella, Powers and Thompson put the focus on the larger, more casual user base, and they tripled re-creational enrollment at the gym within a year. They had no plans for multi-gym ownership until 2020, when COVID lockdowns forced other local gym owners to seek an exit. The co-founders saw an opportunity to build upon their early success, and they’ve yet to slow down. Powers now owns 16 gyms across Arizona, Colorado, Florida, North Carolina and Texas. The next-largest operator has 10 gyms, according to Thompson. Powers-owned gyms have retained their existing names, and they continue to operate elite-level teams. But most initiatives are targeted at broadening participation. One successful tactic was the construction of a parkour obstacle course that would appeal to boys who might otherwise dismiss gymnastics. A $100,000 obstacle course -- built by the company that designed courses for NBC’s American Ninja Warrior competition show -- paid for itself within three months after 200 boys signed up. Powers has since brought a team in-house to construct similar courses for both its own gyms and external customers. Powers also began brokering insurance to other gyms about a year ago, and Thompson said the company has thus far captured about 3% of the market. The company now has 40 staffers at the corporate level and another 500 or so at its gyms.
ACCELERATING PLANS: The recent funding round, which closed a few months ago, brings Powers up to some $20M in raised capital. The funding will accelerate Powers’ further expansion plans, which in the near term will focus largely on Arizona and Texas. “We like gyms that are run well,” said Powers Gymnastics general counsel Ku Yoo of what the company looks for in potential acquisition targets. “That generally means cashflow positive, that they are performing different functions. And we really focus on a mix of classes.” Relevance Ventures is a relative newcomer to the sports world, as Powers Gymnastics is the investment firm's first core sports company. The firm was launched in 2011 as a public-private partnership with Tennessee, but it has since raised three private funds with a focus on health, wellness and well-being. “The general premise is that buying one gymnastics gym, you might buy at a multiple of three-times EBITDA. If we can get 50 of these things consolidated and all operating under the same kind of unified structure, you’re talking like 14- to 15-times EBITDA for the business,” said Relevance managing partner Cameron Newton, who compared Powers to Varsity Brands, the cheerleading uniform manufacturer that Bain Capital Private Equity acquired for $2.5B in 2018. Newton expects Relevance’s eventual exit will be through a sale to a larger facility operator, like Planet Fitness, or a buyout firm. “Private equity is definitely a direction I think this can go,” said Newton. “And if you let it run, you’re going to be big enough to go public with this thing. There is enough TAM out there where this could be just a gigantic business.”