Kazakh startup closes business in Russia and aims for the U.S.Kazakhstani startup 1Fit made its breakthrough in 2021. Providing its users with a single subscription to hundreds of fitness clubs and sports studios in Almaty, Nur-Sultan, and Shymkent, the company was able to dramatically increase revenues in the previous year, writes Forbes.kz.
As the founder of the project, Murat Alikhanov, @amuriarty, says in January 2021 the company had earned $139,000 per month but in November the revenue was $915,000. In December, the number reached $1 million. Not all the money stays in the company. A solid part of it is distributed among the partner gyms where 1Fit users do sports.
"In total, we earned about 2 billion tenge during the year. But the best thing is that we have increased the gross margin (revenue of the company, from which the cost of goods sold is deducted). Now it is about 75%," Alikhanov said.
If we talk about active customers, the startup has about 25 thousand of them. 1Fit operates in Almaty and Nur-Sultan, and from September 2021 the company branched out to Shymkent. Entry into the regions of Kazakhstan is quite comfortable due to the low entry price of the new market. In addition, the company has already gained enough recognition in the country.
In 2022, the company launched its first offline point - 1Fit Lab, where users can do free body analysis and get recommendations from trainers and doctors.
The startup's team has also grown noticeably. For example, if the company had about 20 employees at the beginning of 2021, at the present day there are more than 100.
Working with partners
After the pandemic, Alikhanov says the company found it much easier to get partners on board, mostly because many of them needed help getting out of the lingering effects of quarantine.
In 2021, about 400 partners joined the company, and the line of services was expanded to include recovery treatments.
The figure for 1Fit's marketing expenditures varies.
"In December, we spent about $196,000. Before that we never did such an intensive marketing campaign - we focused more on performance. But despite the aggressive marketing, we do not spend more than 20% of our revenue on it. And we do it because it attracts clients," says Alikhanov.
The realities of Russia
The company entered the Russian market in September 2021, the first city chosen for its expansion was St. Petersburg.
In November 2021, we moved to St. Petersburg with a partner and decided that we wouldn't leave until we had $200,000 a month in revenue. From November 2021, we began to make progress and we began to grow. The partners understood the benefits and came to us themselves. But today the management has decided to close the business in Russia because of the situation with Ukraine. We want to experience the launch in other markets as well, and our main focus this year will be on the launch in the U.S.," he proudly announced.
In the fall of 2021, 1Fit closed a $500k investment deal with a company valuation of $10 million (July 2021). For that money, the investor received a 5% share of the company. The fund is TMT Investments Plc., which has been operating since 2010 with its shares traded on the LSE. The fund invests in various fast-growing Internet projects with the prospect of becoming a major international business.
"There are cities in the U.S. where the population's involvement in fitness is more than 80%. For example, in Almaty, it is 10-15%. In America, we can exist for a long time without investment - we will develop on the money earned in Kazakhstan. And it is quite possible that by the end of the year, we will be worth $100 million," concludes Alikhanov.