Calm Raises $88M Series B To Become Mental Health’s First Unicorn

Meditation was once seen as a new-age practice done mostly by yogis. But sometime over the past few years, meditation became more mainstream. Many would say that’s in large part thanks to companies like Calm.

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Founded in 2012, the San Francisco-based company’s meditation app has become wildly popular. The startups boasts of more than 40 million downloads and 1 million active subscribers. To help accelerate its already impressive growth, Calm announced today it has closed on an $88 million Series B round that propels it into unicorn status with a $1 billion valuation. This follows a $28 million Series A raise that closed last June.

TPG Growth led the latest round, which also included participation from Creative Artists Agency (CAA) and existing investors Insight Venture Partners and actor Ashton Kutcher’s Sound Ventures.

I interviewed Alex Tew and Michael Acton Smith, both co founders and co-CEOs at Calm, to learn more about their plans for the latest round and discovered a surprising fact: Calm saw its revenue grow four-fold in 2018 to $80 million from $20 million in 2017, and it is also cash-flow positive and has been for several years, according to the pair.

That’s a rarity in today’s startup world. Calm is also currently on a $150 million annual revenue run rate. So why has a profitable company raised two rounds of venture capital in less than eight months? The answer is simple, according to Tew.

“TPG are very experienced investors and we decided to raise more capital to move faster. We want to expand international growth, make acquisitions, build out our content library, grow our team, and raise more awareness for this category of wellness and mental health,” he told Crunchbase News. “For years, mental health was something people didn’t really talk about it. It was in the shadows. But now there’s light. Being a unicorn in this category, we think, is a significant milestone.”

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Indeed, wellness is estimated to be a $4.2 trillion global industry, according to the Global Wellness Institute. And, according to the CDC, U.S. meditation practice more than tripled to 14.2 percent in 2017 from 4.1 percent in 2012. Calm also aims to help insomniacs with getting some sleep with its Sleep Stories—which it describes as bedtime stories for adults read by celebrities such as Matthew McConaughey, Stephen Fry, and Leona Lewis. For fun, it even made headlines last year for having a soothing voice read the EU’s GDPR legislation.

“Calm is changing the way people think about their health and their mindset, responding to a global demand for wellness solutions,” said TPG Partner David Trujillo in a written statement. “Calm stands out for its potential to succeed in a rapidly expanding health and wellness industry, and we’re excited about their prospects for growth.”

Thoughtful Money

When Alex Tew and Michael Acton Smith came up with the idea for Calm, they shared a house in London and had practiced meditation for years.

“Personally, I had started meditating as a teen and found it super beneficial,” Tew said. “People thought I was weird and ‘woo-woo,’ but I was always keen to make it more accessible, and the Internet seemed like a great way to distribute a product that could do that.”

External factors were also at play, he added, with the world only “getting more stressful” and the mobile revolution taking place.

At the time, Acton Smith was running a gaming company called Mind Candy, and found himself feeling overwhelmed with life’s pressures.

“That’s when a light bulb went off with me and Alex,” he said, “and we began the effort to make meditation more accessible, simpler and relatable to folks in the 21st century.”

Today, Calm is a team of 50, having operated what the pair describes in a “lean” way. Still, that’s up from 20 one year ago and nine two years prior.

Looking ahead, the company is looking to expand globally. Calm recently launched in Germany and in Latin America (with the exception of Brazil).

“Currently, Calm is very big in the U.S. but we have ambitions to take it everywhere,” Acton Smith told Crunchbase News. “We want to bring it to many more languages in the world. And we want to do that rapidly…. And while we are going to hire across the business, we plan to still be the scrappy lean startup we are already.”

Illustration Credit: Li-Anne Dias