Jamie Ward has co-founded gym marketplace PayAsUGym, which allows users to sign up to a gym on a monthly or pay as you go basis. It offers a more flexible approach than paying a joining fee and the monthly paid commitment that usually accompanies gyms. Here, Ward talks about how he used seed investment at the beginning of the business’s life and how he came to run the UK version of US giant ClassPass.
What are the details of the company, when was it founded and why? What is your background and what’s the goal of the company?
We founded PayAsUGym for two reasons, firstly I was frustrated with the lack of control in my own life, I was sacrificing my own health, and subsequently a frustration with the gym industry. The gym industry did not have a viable option that would give me the flexibility to fit fitness into my busy, professional life. This was in 2010 when I worked in a high-pressure job in professional services. My co-founder and I decided to build an innovative service that would deliver better access to fitness venues on a more flexible and fairer basis. Our goal is to give people control of their fitness, as we say here we help make life work out.
How much initial investment did the company need to start and where did it come from? What was the money used for and how was the site developed? How did the product grow to the point where another round was needed?
We took a series of seed investment over the first three years of the business, around £1 million. These funds were pretty much used exclusively to build the product and test performance until we were happy we had a service we could scale up. We built everything in-house so that we had complete control and the ability to test and innovate at our speed. We were the first company globally to attempt to create a marketplace for fitness venues, so it took time to develop a totally new concept into the market leader it is today.
The service now gives our customers access to gyms, health clubs, pools and spas all over the UK in one pass. There is at least one facility available in 96 per cent of postcodes and they range from independent boutique facilities to the largest branded chains. Customers select from pay-as-you-go or unlimited monthly passes. A monthly pass gives you unlimited access to all UK fitness facilities at that price range or less. There are no joining fees. All PayAsUGym passes are flexible and can be cancelled at any time and we can offer refunds if the pass has not been used.
Further reading on entrepreneurs:
- Anytime Fitness founder Chuck Runyon on building a global brand
- Entrepreneur interview: Zarir Vakil, StepJockey
- Entrepreneur interview: Dom and Ali Beaven, Prezola
Significant growth milestones for us includes securing 40 per cent of all gyms in the UK and topping 100 per cent top line growth per annum.
Talk about the investment process. From start to completion, what was involved procedurally and what do scale-up companies need to be aware of to ensure an efficient fundraiser?
Create a strong investment deck that really illustrates the opportunity and vision and then create a one-page teaser.
“Try to avoid going direct and instead introduce yourself to directors to generate warm leads”
Send the one-page teaser and ask for a meeting. If more information is requested before arranging a meeting, then politely decline. Remember you are offering your time too, the investor has to be right for the opportunity you are providing. If they don’t have the time for you, then you don’t share your deck with them. Prior to meeting any investor, think about the benefits you want from an investor beyond financial ones – critically can you work with them? Are your goals aligned? In the background build a data-room with all the information that will be requested. The sooner you can provide this after genuine interest is shown, the quicker the process will be (and interest maintained).
Be clear about your timelines. If you can, try to generate competition between investors for taking the lead. Think about what benefits a lead investor would get, for example, a position on the board or other benefits.
What was the source of the latest round of investment? How did it come about and what contacts were utilised?
We were in a fortunate position, given the performance of the business, when we opened our latest round we were over-subscribed from current investors from the start. While I do like to bring in new investors at each round, as I feel this does bring extra value and competition, I’m also loyal to investors that took the risk at an earlier stage. I would caveat this by saying the investor has to be right for the next stage of growth, luckily some of our earlier investors were perfect for our next growth stage and future ambitions.
What exactly will the money be used for and how will you maximise control over your cost base moving forward?
Most of the funds will be used for marketing and product development, for both the consumer product and the gym portal. We obviously keep our eye on costs but the biggest risk for us is not taking the opportunities in front of us as they could potentially be even better in terms of developing our customer base and scaling up the business.
Cost savings are coming with scale.
“As frustrating as it is, the cost of doing business as a start-up is significantly higher than a scaling or scaled up business”
Everything from payment processing fees to office costs can be reduced with scale.
What specific advice would you give to scale-up companies seeking to follow the same route of investment?
Next time I would raise more funds initially so that I could test, develop and learn quicker to get to a scalable business. Instead we took a number of smaller rounds from Concentric, Albion Capital Group and MMC Ventures, which meant that a significant amount of time was diverted to fundraising instead of growing the business. It’s easier said than done though, especially as a first-time entrepreneur and with a completely new business model. We never used crowd-funding as the whole environment was not mature enough yet, however I believe used tactically, alongside traditional funding, you can build customers and awareness which with the funds raised puts you in a stronger position from the start.