Local gym Alchemy is no stranger to the Twin Cities startup scene. It was founded by veteran tech and fitness entrepreneurs and has been involved with groups like Bunker Labs, The Coven and Twin Cities Startup Week since it was founded three years ago.
Now, the gym is getting in on the startup action itself, raising its first formal round of capital to add its fifth Minneapolis gym and open its first out-of-state location in Denver.
Alchemy is close to closing a $1 million round of convertible debt to build its next two locations, CEO Mike Jones told Minne Inno. The Syndicate Fund, a group led by Techstars Farm to Fork Director Brett Brohl, is Alchemy’s lead investor, Jones said.
Alchemy’s Uptown gym will be located in MoZaic East at 2900 Fremont Ave. — the same building as WeWork’s second Minneapolis location, which is slated to open later this year. Jones said that Alchemy considered a number of markets for its first out-of-state gym, including Charlotte, N.C., and Austin, Texas, ultimately chosing Denver because of its similarities to the Twin Cities.
“We knew we wanted to get to Denver early on,” Jones said. “It’s similar to Minneapolis behaviorally, and overall a great fitness market.”
Alchemy distinguishes itself from other boutique gyms through its workout tools and class offerings. Members can choose between five different classes that consist of various forms of yoga, strength and intense conditioning.
“A lot of places offer one thing, like spin, and that’s it. Then there’s CrossFit, which is its own crazy, weird thing. It’s intense and multi-dimensional, but lacks things like recovery,” said Jones, who co-founded Union Fitness, a chain of three Twin Cities CrossFit gyms.
“We took all the best parts of activities we loved and changed them,” he explained. “We put them in a different environment and added yoga to create a more complete workout experience.”
Jones co-founded Alchemy with his wife, Andrea, along with Scott Jagodzinski, managing director of GoKart Ventures and several other partners. The first location opened in the North Loop of Minneapolis in 2015. Since then, Alchemy has added three additional locations in Edina, Highland Park and Northeast Minneapolis. The locations in Highland Park and Edina are both less than a year old. Jones said Alchemy plans to continue scaling at this rate and aims to eventually open 100 locations.
“That’s been part of the plan from the start,” Jones said. “We’re in a place where we’ve figured out the right business model, marketing plan and how to get the best talent.”
Jones said that it costs an average of $400,000 to get an Alchemy location up and running. The current $1 million round is almost fully subscribed, Jones said, and will likely close later this month. After the new locations in Denver and Uptown are established, Alchemy hopes to raise an equity round that it will use to either add another Colorado location or expand to other markets in 2019.
Jones considers Alchemy to be a “gym that thinks like a startup,” and believes that its classes often attract those with an entrepreneurial mindset.
“Entrepreneurs and freelancers don’t like fluff,” he said. “They’re busy, and they want something quick and intense that works. A good group fitness program is effective, challenging within your limits and makes you feel good when you’re done. That’s exactly what we’ve created here.”
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