News that Calm seeks more funding at a higher valuation is not transcendental thinking

'Growth' is a mantra

Earlier this week, Bloomberg reported that meditation app Calm is looking into raising $150 million more at a valuation of around $2.2 billion, more than double its last private price. This should not surprise.

Calm has raised capital at high prices before, including its 2018 Series A that valued the startup at more than a quarter billion dollars. Its 2019 Series B made Calm a unicorn. And the space that Calm plays in has been hot for years, so to see the company attract new capital at a higher price feels downright pedestrian.

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Sure, $2.2 billion for an app company might sound silly if your head is still suck in 2009. In 2020, the app stores of the world are not just economic engines that aging monopolies are desperate to preserve past their sell-by date, they are geopolitical footballs.

Back to Calm: Let’s rewind the clock a minute and review data from 2018, 2019 and 2020 about the meditation app, its broader category’s venture capital results through Q3 2020 and how the startup and its rivals have marched forward in terms of consumer and venture interest.

Calm down for more Headspace

At the time of its Series B, TechCrunch reported that Calm had “topped 40 million downloads worldwide, with more than one million paying subscribers” and that it had “quadrupled its revenue in 2018 — the company is now profitable — and is on track to do $150 million in annual revenue.” The company announced its Series B in February 2019, making the 2018 result pertinent at the time.

Since then, data has continued to be kind to the meditation sector, where Calm and its rival Headspace — which has its own history of rapid growth — have often led the pack.

Turning to 2019 from Calm’s 2018 data, the top 10 grossing meditation apps saw revenues of $195 million, up some 52% from 2018 results. Still, in 2018 these apps grossed $128 million, hardly a small sum — even with intermediaries Apple and Google taking a huge tax for their hard, and utterly defensible, work.

The downloads and resulting revenue were not missed by VCs this year.

As TechCrunch reported in August, while wellness startups didn’t excel as a group in the first half of 2020 in VC terms, inside of the category, mental-health-focused apps did rather well. According to CB Insights data at the time, “in Q1 and Q2 2020 [mental health] startups saw 106 rounds worth $1.08 billion. In the year-ago period, the figures were 87 rounds worth $750 million,” we wrote.

That’s a healthy step up in venture interest in a single year.