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On demand massage company Soothe raises $35M

Soothe will use the funding to expand its coverage nationwide and internationally

Financial trends and news by Steven Loeb
March 10, 2016
Short URL: http://vator.tv/n/43dc

It may seem weird to some people, but I've never had a massage. Partially that's because of the cost, but also because, honestly, I want to know that the person who is going to be touching me is not going to hurt me, and also won't be a weirdo.

On-demand massage service Soothe solves both of those problems. It makes it more convenient to get a massage, by having the therapist come to your house, cheaper by cutting out the huge overhead that so drive up the costs at spas and easier to see which therapists are reputable with a ratings system. 

The company announced on Thursday that is has closed a $35 million Series B round of funding, led by the company's previous investor, The Riverside Company. With this round, Soothe has now raised a total of $47.7 million in funding to date.

Soothe was founded in 2013 by CEO Merlin Kauffman, while he was at Harvard Business School. While traveling, he found it hard to find places to get massages in new cities, he told me in an in interview.

"I grew up getting massages, and when I was traveling for business I would end up in cities where I found it challenging to book last minute massages, and I was often disappointed," he said. "So I saw a big gap in the market."

A big issue with massage therapists are low wages earnings; they typically make minimum wage plus tips. By eliminating the "huge overhead cost of running a spa," Soothe is also to pay therapists four times the industry standard, roughly $70 an hour. It does this by giving the massage therapist 70 percent of what the client pays.

The app has also instituted a two way rating system, where both the client and therapist are able to rate each other. 

The number of massage therapists on the platform have more than doubled since last year. Soothe now has more than 3,300 massage therapists, and hundreds of thousands of users, of which tens of thousands of them are active.

"Massage is $14 billion market in North America, so that's a  pretty large consumer base. We typically serve men and woman aged 25 to 44, that's our primary demo," Kauffman told me.

"We many different types of people who benefit from Soothe. Athletes love to use it for their aching muscles, busy professionals who dont have much time and have unpredictable schedules. Moms love Soothe, and so do pregnant woman, since we offer prenatal massages."

The company's biggest competitor right now are the brick and mortar spas, he said.

"We are the only real player. This is pretty green pasture, which is great for us, since we are very established and geographically distributed. We also have better unit economics, and are the fastest growing company in the massage space," said Kauffman. 

"That's why is was possible to raise $35 million. Our business model is very successful. This is blue chip industry. People have been getting massages for thousands of years. it's not going away, it's not new but we do it better."

This new funding will allow Soothe to expand geographically. It is currently in 21 cities across the United States, including Los Angeles, New York, Chicago, Boston, Miami, Phoenix, San Francisco, San Jose, Washington D.C., Seattle, Houston, Minneapolis, Philadelphia and Atlanta.

By the end of 2016 the company plans to be in more than 40. It will have national coverage, and will also start expanding internationally this year.

It will also continue to develop the product, which means expanding the team.

"We are the number one presence in the massage on demand space, and it takes a lot of capital to continue to grow to a large portion of the market share," Kauffman said.

Right now Soothe is at 40 employees, and will be adding to its operations, engineering and sales teams.

The company will also use the funding to try to cut down on the time between booking and getting a massage, with tools to make that easier for partners on the platform. Currently 60 percent of bookings are completed within three hours. 

In the next five years, Kauffman expects Soothe to be the largest massage company in the world, he told me.

"By that point we will likely be a public company, and will probably have expanded beyond massage into other wellness categories," he said, though he would not say specifically what those categories might be. 

"Look at quality of life for the traditional massage therapist. They don't have a tremendous amount of earning power, or freedom in terms of schedule. They're earning minimum wage," said Kauffman. "It was very unexpected just how much gratitude massage therapists would have toward the company. We are changing those therapist lives, like night and day from what their lifestyle used to be. They now have freedom and earning power."


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20326
Soothe
Startup/Business
Description: Soothe delivers high quality massage to your door in 1 hour.

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