Ed Buckley, CEO of Peerfit, a Tampa-based company in the digital health space, has made significant strides in acquisitions and inking partnerships – allowing the company to receive high recognitions in the startup community.
During the 2022 TIECON Tampa Bay event held in Tampa, Buckley shared how one of Peerfit’s largest milestones took place when Peerfit was in the midst of raising its Series B round.
Peerfit, which raised $18 million in a Series C, raised $10 million in a bridge round in 2020 led by Tampa Bay Lightning owner Jeff Vinik, along with California-based Virgo Investment Group.
Vinik led Peerfit’s Series B round and Virgo led the company’s Series C round.
Buckley shared that when he first approached Vinik to lead the round, Vinik came in with the lowest term sheet.
Buckley said he was initially surprised by the offer, but soon realized entering into a deal with Vinik was far more valuable than pursuing a higher valuation.
“As Jeff and I got to know each other and meet more and more, eventually, he [Vinik] is like, ‘look, I’ll do the whole thing and here’s my promise to you – I’m going to be the best advocate, the best fighter, the best partner for you that you could ever have. You’re going to take a little less on the valuation, but you’re going to make it up in the long run because I’m going to have your back,'” Buckley said.
“It was one of the smartest decisions we ever made,” Buckley said. “I could’ve taken a higher valuation that may make our ego feel good for the next couple of months, but to have someone who understood [the business] is the real value there.”
Pushing through the pandemic
While Peerfit has found success in Tampa and securing investors such as Vinik, Peerfit was one of many companies that had to navigate the hardships of the Covid pandemic.
“Fitness was one of the most shuttered industries during Covid, and yet we still doubled our book of business and did so with significantly less staff, less cost,” Buckley said. Peerfit laid off an undisclosed number of employees.
“We brought the executive team together and told everyone they’ve got to cut costs. You could do it through people, processes, whatever. We are going to be like your advisors, but you have to come up with it,” Buckley said, explaining how he directed his team. Decisions were also made to not bring on any new employees as a cost-saving measure.
“When Covid hit, our board was adamant: There would not be more capital coming in to rescue you. You’ve got to find a way to make this work with the capital that you have, extend the runway and deliver top-notch service and product to the market,” Buckley said.
While crunching the numbers to financially endure the woes of the pandemic, Peerfit had also executed a deal with popular cycle company Peloton, which flourished during the pandemic as gyms closed and people scooped up Peloton spin bikes to workout at home.
Peerfit sold its intellectual property and technology and transferred some personnel to Peloton. No equity was exchanged between Peerfit and Peloton.
“I remember during Covid, we did the entire diligence process. When we got down to closing week, the deal fell apart, and we put together a completely new deal,” he said. “That deal had been so draining and so complex and complicated that even on closing day, they missed closing by the time of day the banks closed.”
Ultimately, when the deal materialized, Buckley said it was a big win for the company as the proceeds would be used for a partial shareholder redemption, and to fuel Peerfit’s growth.