After two funding rounds and explosive international growth, the #1 Gen Z fitness app Steppen was recently sold to Alta Global Group ahead of their plans to IPO in the US. Coming out of the deal, co-founder Jake Carp recently shared 5 insights on LinkedIn about the process and his learnings from the experience. I then had the chance to chat with Jake about his insights post, including what he learnt about navigating the acquisition process and why it was the right time for the co-founders to exit.
First, some background on the acquisition
After attracting over 25,000 users to their app, Steppen secured a $500,000 pre-Seed cheque from Afterpay’s Anthony Eisen and the Jagen family office in August 2021. The team was then accepted into Startmate’s Accelerator program in December of that year. Nine months later, Steppen had over 325,000 app downloads and closed a $1.65 million Seed round led by Galileo Ventures, which included LaunchVic’s Alice Anderson fund and Flying Fox Ventures, as well as return investors Anthony Eisen, the Jagen family office and Startmate.
Steppen now has over 400,000 app downloads, a database of over 280,000 users, and peaked at #5 in the health and fitness app category with a rating of 4.6 out of 5 on the Apple App Store.
That’s a lot of milestones for a two-year period!
Alta Global is a combat sports training platform that sits at the intersection of MMA (the world’s fastest growing sport) and the high-growth affluent fitness market. With the acquisition, Alta looks to leverage Steppen’s proprietary technology and content expertise to help it build a “tech-driven revolution that will allow gyms, coaches, and participants to harness the power of technology, fostering deeper connections with their communities,” said Alta founder and CEO Nick Langton.
Jake’s key learnings: Managing complexity & communication
As it was the first time the Steppen team had sold a business and it was Alta’s first acquisition, there was a steep learning curve on both sides. Jake said that it took him a month just to fully understand what needed to happen after talking with all the stakeholders.
Once he was clear on the process, he ran into the second friction point, which was figuring out how best to structure the deal with investors, acting as a mediator between the investors and buyer, including working with their respective legal and accounting teams.
“Legal and tax compliance is more complicated than you think, but less complicated than your lawyers and accountants will try to make it," Jake says. "Try [to] keep it simple and question why things need to be done a certain way.”
He emphasised that he sometimes felt if they could’ve simply assembled all the legal, accounting and investor stakeholders into a single room, they could have smashed out a deal in a day.
The key takeaway? Deals like this are intricate and clear communication is critical. Text-based methods like email or Slack can easily cause confusion or other issues. Phone calls, Jake says, are the best way to communicate with stakeholders because it adds nuance and for people to hear things like the intonation of someone’s voice. This extra layer of signalling goes a long way in smoothing over misunderstandings and keeping the deal on track.
How did they know it was the ‘right time’?
Founders are always thinking about growth strategy, execution, and delivering value to customers. This doesn’t leave a lot of time for formulating an exit plan.
In Steppen’s case, the team wasn’t seeking an exit, but after being approached by Alta, took the time to shop for competing offers. It was the act of going through this exercise that helped them decide to sell.
It was “the right time” because they were able to exit on a high, with great user retention and momentum, leaving the business trending upwards. Plus, Alta was a good fit to continue providing value to and supporting Steppen’s customers amid its US expansion efforts.
Alta plans to continue running the Steppen app and leverage its talent and content expertise to maximise value for its user base. The Steppen acquisition is one part of Alta’s global ambitions which include signing deals to roll out Alta’s programs to UFC’s gym, UFC Fit, and five multi-year deals for at-home content programming with famous combat and sport news personalities. To round it off, Alta has also signed a mandate with an investment bank in New York on the back of plans to IPO.
Is this the end for co-founders Jake, Cara, and Dave? Far from it, the legendary trio hope to team up down the road for another startup. As for Jake, he’s joined Blinq as Chief of Staff.