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Thursday, Oct 6, 2022

Winning Team

Sports recovery brand Hyperice Inc. has been built alongside athletes and athletic trainers, who have provided both product advice and media attention to the 10-year-old company.

Now the Irvine-based firm—which makes increasingly popular massage therapy devices and other recovery products—is giving more athletes a seat at the ownership table.

Hyperice scored a $48 million investment last month. In addition to traditional venture capital firms, new backers include players’ associations and professional sports leagues, as well as individual athletes.

Naomi Osaka

It now counts more than a dozen professional athletes as endorsers and equity investors, including Kansas City Chiefs quarterback Patrick Mahomes and tennis star Naomi Osaka.

The round was “about bringing athletes into the company as partners and investors,” and all named participants invested their own dollars, Anthony Katz, founder of Hyperice, told the Business Journal.

“People think Hyperice is an overnight success story, but we’re not,” Katz said.

“We’ve been building it for 10 years and we really have a great team of people behind our products.”

News of the Series A round, which vaulted the company to a $700 million valuation, comes amid a flurry of deals with professional leagues that are making Hyperice products part of the mainstream conversation around health and wellness, Jim Huether, the company’s chief executive, told the Business Journal.

The new funds and high-profile partners will further “elevate meaningful experiences” for players, fans and fitness-minded individuals around the world, the company said.

Growth Catalyst

Hyperice continues to grow at hyperspeed, despite the pandemic. This year the firm expects annual sales to exceed $200 million, compared to $140 million in 2019.

Increased consumer interest in health and fitness, along with continued portfolio development, has spurred growth.

Jim Huether

Hyperice’s portfolio includes ice packs, temperature-controlled heat pads, vibration foam rollers and its best-selling handheld massage gun, the Hypervolt, among others.

The products promise a range of health benefits, such as soothing sore muscles and promoting faster recovery.

In March, Hyperice acquired Boston-based NormaTec, which brought the firm’s advanced compression suits that fit around the arms, hips and legs into the fold.

NormaTec’s devices were developed by biomedical engineers and use pulsing technology to improve blood circulation, relax muscles and increase range of motion.

“NormaTec has the history and legacy of being the first true recovery brand,” Katz said.

By joining forces, “we have a category now, not just a product. That’s the difference.”

Critical Mass

Professional leagues started reaching out to Hyperice to strike multi-year agreements following the NormaTec acquisition.

Last month, Hyperice partnered with Major League Baseball—the MLB is investing in the company and Hyperice is now the league’s official recovery technology partner—and the PGA Tour to put its devices in golf tournaments, driving ranges and mobile fitness centers.

The company signed a deal with the Ultimate Fighting Championship in September, in which it will introduce its products to fighters at performance institutes in Las Vegas and Shanghai.

In July, the National Basketball Association nabbed a similar deal and this past season the company’s Hypervolt massage guns were frequently spotted beneath players’ chairs at televised games.

The deals reflect the fact that Hyperice has achieved “critical mass” in the professional sports industry, Katz said.

Marton, Kobe Bryant

Katz, a former high school history teacher and basketball coach who grew up in the Laguna Beach area, set out in 2009 to make a modern ice pack that could better serve basketball players compared to the old-school approach of a plastic bag full of ice and an ace bandage or saran wrap used to keep the bag in place.

He started cutting up neoprene scraps from a local wetsuit shop to make a fitted ice pack for the knees.

Katz then enlisted Fullerton-based machine shop Marton Precision Manufacturing to develop an air-release valve to compress ice against the body.

Robert Marton, one of the brothers of Marton Precision co-founder Dan Marton, who previously made components for various space missions such as the Mars Curiosity rover, was the lead engineer on the project.

One of the first athletes to try the compression ice pack was OC resident Kobe Bryant, whose athletic trainer went to school with Katz.

Bryant gave Katz a few suggestions, and he tweaked the product.

It was the first of many tips that would influence Hyperice’s recovery products. Subsequent suggestions led the company to expand to temperature-controlled heat packs, vibration devices and more.

Blake Griffin’s Assist

After the company signed Detroit Pistons forward Blake Griffin—then with the Clippers—as its first athlete ambassador in 2012, it stumbled upon the idea that led to its best-selling product today.

Griffin introduced Katz to a device he referred to as a “vibrating hammer,” used by athletic trainers that cost about $3,000, weighed about nine pounds and couldn’t be operated by one person.

Athletic trainers hated using it, but athletes loved the results it produced, Katz said.

By that time, Hyperice had already developed several vibration devices such as foam rollers and balls.

Katz and Robert Marton, who joined Hyperice as a director of operations and product in mid-2012, started playing with the idea of a handheld massage gun.

“That’s a big theme for Hyperice,” Katz said. “Our products weren’t developed in a vacuum. One led to the next, and the more products we have, the more time we spent working with trainers and athletes.”

The first version of the Hypervolt was called the Raptor. It debuted in 2015 and cost about $3,000.

Fast forward to the end of 2018, and the lightweight, high-torque Hypervolt hit stores. It ranges in price from $349 to $399.

Digital Health

“Crazy Powerful, Still Quiet,” might be the tagline of the wireless Hypervolt, but Hyperice plans on making noise in the consumer health and wellness market.

In August, it launched the Hyperice mobile app, which harnesses data from fitness apps such as Apple Health and Strava to offer individual users guided stretches and routines using its devices, which are connected via Bluetooth.

The platform is “part of our vision to create personalized recovery” and brings “utility” to the products by demonstrating how and when to use them, Huether said.

The company also strives to bring prices down for its devices.

Since acquiring NormaTec, it’s brought prices down 30% for several of its products. It’s leg compression system cost $2,999 in March. Now it costs $999.

“We’re big on democratizing health and wellness for everyone,” Katz said.

Well-Rounded Team

The just-announced round is Hyperice’s first major financing; it raised about $4.5 million in previous investments.

It was led by Main Street Advisors, a Santa Monica-based investment firm with ownership in Adidas and Nike; and New York-based SC.Holdings, a private equity firm with holdings across sports and entertainment, real estate and retail sectors. 

“Hyperice is the clear category leader in the rapidly growing recovery market,” SC.Holdings founder Jason Stein, who joined the Hyperice board of directors, said in a statement.

“By developing products inspired by professional athletes, and making recovery technology and education accessible to all, Hyperice will drive continued growth in the health and wellness industry.”

The NBA, 32 Equity, the investment arm of the National Football League, and OneTeam Partners, a marketing and investment platform for the NFL and MLB players’ associations contributed.

NFL star Mahomes, who is represented by Newport Beach sports agents Leigh Steinberg and Chris Cabott, said last month that he had taken an equity stake in the company, and would be a brand ambassador.

Huether and Katz couldn’t be happier with their new team. 

At the end of the day, “the people you bring in are more valuable than the delta you might give up on the capital raise,” Huether said.

“Don’t settle for partners or organizations that you’re not fully aligned with.”

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