PROVIDENCE, R.I. (WPRI) – ShapeUp Inc., one of Rhode Island’s most prominent tech startups, has been bought by a division of British entrepreneur Richard Branson’s Virgin Group.
Providence-based ShapeUp, which markets software to help companies encourage employee wellness, was formally acquired Tuesday by Virgin Pulse, a Framingham, Massachusetts-based wellness company, along with another business, Global Corporate Challenge of Melbourne, Australia.
The three-way merger creates what Virgin Pulse says will be the largest well-being company in the world, with more than $100 million in combined annual recurring revenue, 468 employees and 2,200 customers across 185 countries. Financial terms of the deal were not disclosed.
ShapeUp CEO Dr. Rajiv Kumar, who co-founded the company in 2006 while attending medical school at Brown University, will be staying on as Virgin Pulse’s president and as chief medical officer at its research arm, the Virgin Pulse Institute.
“This has been an incredible and very emotional day for me personally,” Kumar told WPRI.com on Tuesday. “In many ways this is a dream come true, and the result of a decade of a lot of blood, sweat and tears. So I’m feeling just about ecstatic.”
“I am delighted Virgin Pulse, ShapeUp and GCC are now joining forces to create an even stronger platform and service,” Branson said in a statement. “This will ensure our customers can promote health and well-being for their people around the world.”
The ShapeUp deal appears to be the highest-profile tech acquisition in Rhode Island since the 2014 sale of Andera, a banking-software startup founded by Charlie Kroll, another Brown graduate. ShapeUp has raised $15 million from venture capital firms in the decade since it was founded.
Kumar, 32, said the Virgin Pulse deal grew out of conversations over the last few months with officials at Insight Venture Partners, a New York private-equity firm that led a $92 million investment in Virgin Pulse last year and is providing funds for the merger. He described the opportunity as “a no-brainer.”
“For us it was really an obvious choice,” he said. “It’s the right move because it allows us to continue pursuing our mission, which is to make workplaces more healthy and successful. It gives us a much larger footprint and much larger financial resources.”
ShapeUp currently has 134 employees, with 92 at its local office in the Jewelry District, nine at its Boston office, and 33 who work remotely. Kumar said he will remain stationed at the Providence office and he expects the company to continue hiring there as it grows.
“From my perspective this is an incredible Rhode Island startup success story, and it has all of the ingredients that people talk about as assets for driving economic development locally,” he said.
Kumar ticked off a number of ways Rhode Island contributed to ShapeUp’s growth, including its roots at Brown, its victories in the Rhode Island and Brown business-plan competitions, a 2008 innovation tax-credit from what was then the R.I. Economic Development Corporation, and the skills of the local work force.
“I think ShapeUp is a case study for how Rhode Island can and should incubate successful technology companies,” he said, adding: “We showed it’s possible to create a company that creates a lot of high-paying jobs and can succeed, and I think this is a model that other companies can follow.”