Health And Wellness Platform Paceline Scores $5M In Venture Capital

Paceline, a platform that incentivizes people to live healthy lifestyles, is just getting started.

The company just raised $5 million in seed money from a long list of investors, including Montage Ventures, Propel Venture Partners, Northwestern Mutual, Courtside Ventures, GreatPoint Ventures, Lux Capital, Clocktower Technology Ventures and NextView Ventures.

But according to founder and CEO Joel Lieginger, the company's origins can be traced back to 2013 on a road in Hong Kong.

Mark McCombe, Senior Managing Director at BlackRock, also happened to be there.

"Mark and I met in Hong Kong in 2013," Lieginger told Benzinga. "As keen road cyclists, we actually met out on the road on a group ride." 

McCombe was running BlackRock in Asia at the time. Lieginger, meanwhile, was overseeing investor relations and corporate development at life insurance company AIA Group Ltd.

"We hit it off immediately and have been friends since," Lieginger says. "Mark has been an integral part of my starting Paceline as he recognizes the opportunity to create vertical finance through health and wellness across credit cards, banking, and insurance."

Not only is McCombe an angel investor in Paceline, he's also responsible for its name, Lieginger says.

"Any avid cyclist recognizes the power of a Paceline; people working individually for the benefit of the team," McCombe says. "When Joel spoke to me about the idea of creating a rewards community via health and wellness and financial services, I knew Paceline was the perfect name to express his vision."

McCombe is part of a "very deliberate" investment syndicate, Lieginger says, citing the group's overall expertise.

"Montage and Propel bring immense fintech experience, while Courtside is focused on consumer health and wellness/fitness, and Northwestern Mutual Future Ventures brings strategic insurance depth all of which give us a leg up on where we are going with changing the nature of preventive health in society by materially incentivizing people to be more physically active," Lieginger says.

How Paceline Works 

Paceline tracks physical activity through wearables and leverages customer spending data, accessed through a linked credit card, to curate health and wellness rewards.

The San Francisco-based company then uses this data to build financial products (i.e., a health and wellness credit card and life insurance products).

The goal is to change the nature of preventive health in society, Lieginger says. Healthier consumers are the best risk for retail financial services. They buy more and cost less.

Paceline, touted as the only marketplace platform to consolidate health and wellness across sectors for the "next generation connected consumer," wields gamification. It's a clever strategy that grants points and rewards to encourage engagement and improvement — much like a video game.

In recent years, JPMorgan Chase & Co. JPM used a similar tactic to incentivize customers to improve their financial health.

This can be a powerful tool, Lieginger says.

"Whether in mobile gaming, loyalty rewards programs, or increasingly in financial services, attracting and keeping customers engaged is simply a better business model than traditional transaction marketing, campaign driven advertising spend where customers are often easily acquired at great cost but quickly churn," Lieginger adds.

"Any business that can figure out how to acquire more customers through ongoing engagement versus transactional acquisition has a winning go-to-market formula that can create higher value costumers over time," he says. "That is what we are doing, and I don't see it slowing down anytime soon."

Fundraising During Pandemic

Indeed COVID-19 made raising capital difficult for Lieginger and his team.

"The fundraising process during COVID was very different than under normal circumstances in two respects," he said. First, the company started the raise in June when private equity investing had been stalled for a few months initially post lockdown.

"This meant we were out raising money in an environment where most firms were not writing checks, and if they were, they were going to startups that they had been engaged with prior to Covid, and we were very new and unknown having just launched in January," he adds.

Second, having spent the majority of his career in Asia working at life insurance giant AIA, Lieginger's investor contacts in the U.S. were slim. 

"I was building it all from scratch through Covid and through Zoom, and we put the full syndicate together without a single in-person meeting prior to receiving a term sheet," he said. "With both of these challenges, we threw the typical fundraising playbook of simultaneous pitching all firms at once out the window, and went with a very organic strategy of relying a very warm introductions from a small but very close network of trusted founders, financial services executives, and [venture capitalists]."

The Paceline team ended up booking some 110 meetings in 10 weeks, snagging enough capital to ensure a conservative 24-month runway, despite the uncertainty of the coronavirus pandemic and economy.

"We were very fortunate to have multiple term sheets and the round was more than two times oversubscribed as what we are building in health and wellness and fintech is creating a new category that the current trends in technology and markets are unlocking for the first time," Lieginger says.

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