Zwift, an app that lets cyclists compete and interact with each other in a virtual world, has raised $120 million to fund an expansion into esports.
The Series B investment — the second major round of funding for a start-up — was led by venture capital firm Highland Europe, whose portfolio includes Huel, WeTransfer and eGym.
Founded in 2014 by trader-turned-CEO Eric Min, alongside co-creators Jon Mayfield, Scott Barger and Alarik Myrin, the firm has so far gained 1 million registered users and raised a total of $166 million in capital from investors.
"I started my career on Wall Street," Min told CNBC in an interview. He went from a vice president role at J.P. Morgan to starting his own trading platform, Sakonnet Technology, before travelling to London and deciding to set up Zwift.
"This idea sort of mixes what I've been doing in my profession and my passion, which is cycling," he said. Cycling is the dominant form of fitness training on Zwift's platform, its boss said, with running being an emerging area of focus.
To use Zwift's platform, users first need a stationary bike or a treadmill. The app hooks up to a smart trainer and sensors to communicate how fast a user is riding or running and whether they are travelling uphill.
As the company takes on esports, an industry projected to grow to $905.6 million in revenue this year by market research firm NewZoo, Zwift is signing deals with cycling federations like British Cycling and Cycling Australia to provide its technology for national championships.
"There isn't a single stakeholder within the industry of cycling that we have not spoken to or already have partnerships with," Min said. "There are probably four or five other federations that are waiting in the wings."
It has ambitions for a professional cycling series, and last week announced the KISS Super League, its first pro cycling league with teams including Bradley Wiggins' Team Wiggins and Axel Merckx's Hagens Berman Axeon.
"I think we've got an opportunity to bring real athletes to a digital platform and no one has ever done that," Min said. "Establishing it as a legitimate sport is something we have aspirations of doing."
He added: "I don't think getting into the Olympics is out of the realm, it's something we've been discussing internally for a couple of years already."
According to Zwift's chief, it costs roughly £300 ($380) to buy the basic kit required to get started with the app. He wants Zwift to evolve into "the most affordable, accessible sport there is."
The company declined to comment on its valuation following the latest round of funding. But Min recognized the swelling size of the investment.
"I think this opportunity is huge," he said. "I think the investors share that view."
He added that the size of the latest round reflected "the amount of investment that's required to build this platform," adding, "for us it's all about investing in growth."
Min said it wasn't the first time the firm had received a sizable amount of funding. It raised $7 million in a friends and family round, $10 million in an angel round and $27 million for its first major funding round.