Here's the 18-page pitch deck a startup rewarding customers for staying fit used to nab a $5 million seed round from VCs, Northwestern Mutual, and a BlackRock exec

  • Paceline is a health and wellness platform that rewards users for physical activity.
  • On Friday, the startup announced a $5 million seed round co-led by by Montage Ventures and Propel Venture Partners, with participation from Northwestern Mutual and a BlackRock executive. 
  • Check out the 18-page deck Paceline used to raise the seed round. 
  • Visit Business Insider's homepage for more stories.

Earn while you burn. 

That, in short, is part of the pitch for health and wellness platform Paceline. The startup incentivizes users to work out, offering them rewards from brands like Whole Foods and Starbucks.

On Friday, Paceline announced a $5 million seed round co-led by Montage Ventures and Propel Venture Partners, with participation from Northwestern Mutual and angel investor Mark McCombe, chief client officer at BlackRock. 

But Paceline's ambitions go far beyond simply motivating users to log a few extra miles to earn a free cup of coffee. Joel Lieginger, the startup's founder and CEO, told Business Insider that Paceline has plans to develop into a hub of highly curated financial products, including insurance and credit cards.

Lieginger, who spent time at AIG and AIA before starting Paceline in 2019, said growing an initial customer base of people focused on health and wellness will pay off big down the line when the company starts rolling out products of its own.

"Healthy people: they spend more, they stay longer, they claim or default less, and they're happier through that entire experience," he said. 

Currently, Paceline doesn't offer any financial products. The startup has an app that users can link wearable devices to for tracking physical activity. If a user records 150 minutes of elevated heart-rate activity in a week, the minimum requirement by the American Heart Association, they are eligible for a reward if they have linked a credit card. Consecutive weeks of achieving your activity goal leads to better rewards, Lieginger said. 

While Paceline isn't currently driving any revenue right now, it is collecting a treasure trove of data it can then use to create more customized products. 

"We will now have the richest dataset to do very personalized underwriting on this entire product suite for you," he added. "We can build the best card card for you because we know your lifestyle and we know what you're currently spending your money on, and we can reward and incentivize you better."

With more than 40,000 downloads of the app so far, it's still early days for Paceline. The first financial product will be a combination of a credit card and insurance product. Continuing a healthy lifestyle and spending on Paceline's credit card will lead to rebates on your insurance. The goal is launch towards the end of the first half of 2021. 

Paceline is working with Railsbank, a London-based banking-as-a-service provider that just raised a $37 million funding round, for its credit card. Lieginger declined to disclose who the company would work with for the insurance side of the product. 

For Lieginger, rolling out Paceline's own products with the help of some partners, as opposed to trying to refer customers to larger providers in the space, is the better play.

"The economics of just being a distribution company are far worse than actually participating in the underwriting product. What we're actually building is a better flywheel," Lieginger said. "Healthier people represent greater product to all these partners."

Here's the pitch deck that Paceline used to raise its seed round of funding. Some financial and other details have been redacted.

Find more pitch decks in our searchable pitch-deck library here.

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