Global fitness tech funding has dropped to $5 billion in 2025, a steep contraction from the sector’s peak four years ago and a clear indicator that investors are moving out of broad growth mode and into selective capital deployment. The shift is less about a collapse in demand for wellness products and more about a decisive rotation toward categories demonstrating durable margins, differentiated data assets, and recurring engagement.
The clearest beneficiaries of this rotation are wearable biometrics and performance analytics platforms. Oura’s $900 million raise at an $11 billion valuation, alongside Strava’s $2.2 billion valuation, reflects an investor preference for companies that can scale without heavy hardware overhead and that accumulate proprietary datasets with long-term strategic value. These models align more closely with software-style economics: repeat usage, defensible engagement loops, and expansion into broader health insights.
In contrast, connected equipment has moved from hypergrowth to structural headwind territory. Peloton’s share price—down roughly 95 percent from its highs—illustrates how exposed hardware-centric businesses are to inventory cycles, logistics costs, and volatile consumer demand. Hydrow and Tonal, both stalled on meaningful fundraises for two to three years, show that capital is no longer willing to underwrite expensive unit economics without proof of sustainable retention and margin improvements. The category is not disappearing, but its capital intensity now requires a level of operational efficiency and brand durability few players have demonstrated.
Meanwhile, consolidation is accelerating in software and service infrastructure. Playlist’s $7.5 billion rollup of Mindbody, ClassPass, and EGYM—backed by $785 million in private equity—signals strong interest in platforms that aggregate consumer behavior, power studio operations, and generate predictable subscription revenue. These assets offer steadier cash-flow profiles and optionality for future cross-product integrations, making them more attractive in a capital-discipline environment.
For investors, the message is straightforward: the market is rewarding data-rich, asset-light fitness technologies and penalizing equipment-heavy operators with slower paths to profitability. Portfolio exposure should skew accordingly. Existing positions in connected hardware warrant reassessment of risk tolerance and exit timing, while wearables and biometric platforms may offer stronger windows for liquidity before this rotation reaches maturity.
