Deal focus: Keep makes a sport of data monetization

When Apple CEO Tim Cook visited China in March, he made a point of visiting two, and only two, Chinese start-ups. One was Ofo, a bike-sharing business that was in the process of closing an $866 million round led by Alibaba Group. The other was Keep, a fitness app that at the time had raised only about $60 million across five rounds.

Apple was not a shareholder in Keep but it was a partner, helping the company collect data via smart watches and promoting the app's new English language version in some 25 countries. In hindsight, the vote of confidence was a fitting prelude to Keep's biggest growth spurt to date – a $127 million Series D round this week led by Goldman Sachs with support from a group of VCs including GGV Capital.

Much of the appeal is in the home market, where health consciousness has increased in step with urbanization-driven pollution woes and improved education. In recent years, a number of small competitors, mostly running-focused wearables, have failed to capitalize on the opportunity in part due to a lack of service diversification.  

"The topics of health, food safety and exercise are topmost in Chinese consumers' minds. There is no other market anywhere globally where the average person actually understands pollution indexes," says Jenny Lee, a managing partner at GGV. "And with millennials looking for jobs, they can be as competitive with each other on looks as they are on brains."

Keep, whose core offering is a basic home training app, will use the fresh capital to branch out into a number of recently tested business lines related to artificial intelligence-supported data usage. These will include pre-booking services for gyms that help users avoid waiting in line for equipment during peak hours, as well as app-connected stationary bikes and treadmills for home use.

The data generated from offline services will be channeled into various paid online verticals as well. For example, user data from treadmills and gym visits will inform more tightly targeted advertising slots and an in-app e-commerce marketplace for sports retailers. Meanwhile, enhanced video content and a range of online group functions including virtual classes will be gradually customized and geared toward keeping users engaged as more data is amassed.

The outlook for this plan is promising. Keep recently launched its first gym-booking service in Beijing and was said to have sold the equipment usage to capacity within an hour. This was achieved with no advertising to speak of – just a no-frills pitch to existing users.

"The reason they have taken off so well is that they actually gamify the app and make it very social," says Lee. "It encourages people to compete and interact. That plays to human psychology, and it's something keep has done that really well. For them, monetization of the platform is not actually a challenge, it's just a matter of execution and packaging the service."

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• Topics
• Greater China
• Expansion
• Technology
• Consumer
• China
• TMT
• Goldman Sachs
• GGV Capital