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Health is wealth, they say. But just because something rhymes doesn’t make it true — as investors in countless wellness-and-fitness fads have found to their chagrin.
This week there’s Ōura, a maker of tech-enabled rings worn by celebrities including Prince Harry and Gwyneth Paltrow. It has raised $200mn from investors including Fidelity Management and Dexcom, a maker of glucose monitors. That gives it a valuation of $5.2bn. To give a sense of the degree to which pulses are elevated, the median “Series D” fundraising this year is just $97mn, with a valuation of just $882mn, according to PitchBook.
True, Ōura’s ring isn’t your basic step-counting widget. Instead, it’s a device that monitors the wearer’s sleep, temperature and general state of wellness. And it has some advantages over other wearable gadgets. The user never really has to take it off, so it provides continuous data. It’s also fairly unobtrusive. Subscribers also get access to a trove of artificial intelligence-enhanced data explaining why they feel so tired and irritable.
A valuation of 10 times revenue reflects consumers’ measurable willingness to spend themselves into sprightliness. McKinsey calculates that the market for wellness is worth $1.8tn a year, and that around half of US consumers have purchased a wearable device. Roughly 20 per cent have a device that specifically tracks sleep. As befits a society ridden with health anxiety, one-third of wearable users consulted their devices more this year than last.
While feeling good is prized, there are many ways to achieve it — and this is the problem which companies like Ōura must wrestle. Fitness is an industry strewn with bad investments. Think of Peloton Interactive, the digitally-connected bike company. After peaking at a $49bn market capitalisation in 2021, it has since crashed to less than one-tenth of that. With so many potential substitutes, from CrossFit memberships to running shoes, such companies are forever on the defensive.
Wearable devices — arguably more “health” than just “fitness” — may be a bit less faddish, but Ōura still faces tough competition. One cautionary tale is Fitbit, the fitness-tracking wristband that went public in 2015 and swiftly attained a valuation of $11bn, only to be bought by Google parent Alphabet in 2021 at a depleted $2.1bn. Apple’s watches are an obvious threat. Facebook owner Meta Platforms, also dabbling in wearables, may be a future menace — if not a suitor.
For now, sales of the company’s gadgets are doubling year-on-year, suggesting it has further to run. In any case, while fads come and go, a constant feature of finance is investors’ short memory. While money is ample and valuations generous, Ōura is wise to put a ring on it.
john.foley@ft.com
