In late 2021, when Fenton-based fitness apparel company Agogie started to seek fresh funding, it turned to the typical roster of startup funders.
That included venture capitalists, angel investor groups, family offices and high-net worth individuals. While conversations were promising, with some nearing an investment, Agogie founder and CEO Aaron Mottern said deals never materialized. But it's now found a new source of funds: its customers.
Launched in 2017, Agogie is a direct-to-consumer, "resistance apparel" startup that has developed pants with built-in resistance bands aimed at helping those who wear them to strengthen muscles and burn calories while working out or walking around. As a consumer products company, rather than a technology firm, Mottern figured fundraising might be challenging. But Agogie's investment search also overlapped with a slowdown in venture funding, as the amount of capital snagged by startups has dropped for three consecutive quarters.
“As 2022 has played out, quarter over quarter, people are doing less deals,” Mottern said. "We are in a very, very small portion of the market where fundraising was always difficult anyways. When you start putting 30% drops quarter over quarter, it really dries the available funding from a traditional piece.”
Agogie, which has previously raised a little less than $1 million, earlier this month launched an equity crowdfunding campaign, with a focus on providing its customers and other individuals the opportunity to become shareholders.
“Our customers made us successful, so why not have the customers benefit longterm from it,” Mottern said.
The crowdfunding initiative involves Agogie offering shares of its Class B common stock at $2.77 per share. Per the terms of the crowdfunding round, the minimum amount an investor can invest is $102.49, while the maximum is $1.2 million. Agogie can raise up to $5 million through the crowdfunding effort, Mottern said.
Agogie's pursuit of the funding comes as it plans to expand its product line, launch a subscription program, and expand to distribute internationally and to the health care supply and military markets. The crowdfunding equity raise values Agogie at $10.01 million. Since its launch, Agogie says it has had more than $10 million in sales. The bulk of its revenue came in 2021, when it had sales of $5.6 million, up from $1.3 million in the prior year. Mottern attributed the 2021 spike to the rising interest in at-home fitness products during the Covid-19 pandemic and said this year’s sales will be lower than last year’s figure, coming in at $4.1 million.
To conduct its crowdfunding raise, Agogie is using investing platform StartEngine.
“The reason we chose StartEngine is because I’ve had other friends in the startup world use them and they said they had a great experience,” Mottern said. “We interviewed every single equity crowdfunding platform out there and they seemed to be the best.”
As of Tuesday, Agogie has raised $21,941 through its crowdfunding round. Mottern said the six-person company, which has its headquarters at 1317 Horan Drive in Fenton, spent the three months leading up to the launch of the crowdfunding initiative strategizing how to engage potential investors. He said Agogie plans to engage the 77,000-plus customers who have purchased its products and also target its social media following.
“There’s a lot of traditional marketing strategy going into it, like you would for just trying to sell a product. During this raise, it’s getting people aware of the raise and using all the techniques you would use in a traditional product sales effort,” Mottern said.
