Venture capitalists weigh in on MyFitnessPal, a calorie and fitness-tracking website and mobile app. “The field’s developed and moved beyond being a fringe behaviour for Star Trekkies into something that’s really mainstream”

August 13, 2013 Leave a comment

August 12, 2013 5:10 am

Venture capitalists weigh in on MyFitnessPal

By April Dembosky in San Francisco

Kleiner Perkins Caufield & Byers has made its largest early-stage investment, leading an $18m round of venture capital financing for MyFitnessPal, a calorie and fitness-tracking website and mobile app. John Doerr, the partner at the venture capital firm who made early bets on Googleand Amazon, said usage of health-tracking gadgets and apps had reached an “inflection point” and was no longer only for star athletes or numbers-obsessed computer geeks. “The field’s developed and moved beyond being a fringe behaviour for Star Trekkies into something that’s really mainstream,” he said.The number of calorie and fitness trackers for smartphones has ballooned in recent years, with several hundred available for download in the Apple and Google stores. MyFitnessPal is the most popular free fitness app on Android devices, and number two on the iPhone.

Weight Watchers, the weight-loss programme where people pay a monthly fee for meetings and counselling, is having trouble recruiting new members amid the mobile competition. The company suffered a drop in profits and revenues in the second quarter and cut forecasts for the rest of the year.

“We feel that some of that is driven by the continued sudden explosion of interest in free apps and activity monitors,” said Nick Hotchkin, Weight Watchers chief financial officer.

MyFitnessPal was founded as a website in 2005. A mobile app was added in late 2008. It has 40m users worldwide who enter what kind of exercise they did and what food they ate. Drawing on a database of 3m foods, the app calculates the calories, sodium and other nutritional metrics from the meal and keeps an ongoing tally.

“We have the largest database in the history of the world around what people eat,” said Mike Lee, co-founder and chief executive, who got the idea for MyFitnessPal when he wanted to shed some weight for his wedding.

The app is free to users, but has been profitable from the beginning because of a successful advertising business popular with marketers of fitness and weight-loss products. The majority of revenues came from desktop use, Mr Lee said, but the mobile business was growing at a faster rate.

In the longer term, he foresees various possible revenue streams evolving, from premium subscriptions to partnerships with hospitals or health insurance companies.

This is the financial promise that Mr Doerr sees in MyFitnessPal and the broader market of health-tracking apps and gadgets. As insurers and healthcare providers faced financial penalties under President Barack Obama’s healthcare reform for repeated hospital visits, he said, they were increasingly interested in technology that could help overweight and obese patients avoid developing chronic – and expensive – conditions such as diabetes and heart disease.

“I think insurers will pay. I think corporations will offer this as part of their employee health plans,” he said.

Kleiner was joined by Accel Partners in the $18m Series A investment in MyFitnessPal. The company will use the fund to double its staff of 40 and expand internationally.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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