Fresh off raising $400 million, Encinitas activewear startup Vuori sets sights on global expansion

When Joe Kudla, founder of Encinitas-based activewear brand Vuori, got a chance to sit down with a representative of startup investor SoftBank, he wasn’t really looking to raise money. He saw it more as a “casual get-to-know you” meeting.

But that initial get-together led to another, and what started as an introduction grew into a business deal that’s landed Vuori one of the largest investment rounds for a San Diego startup in recent memory.

Earlier this month, the company corralled $400 million from SoftBank Vision Fund 2. The funding is a massive bet that Vuori can replicate Southern California’s rich history of launching successful, beach-inspired lifestyle brands globally.

The company will use the funding to expand its footprint in the crowded performance activewear market — opening more than 100 stores in the U.S. over the next five years, while concurrently expanding in Europe and Asia.

“We feel like now is a great time,” said Kudla, a San Diego native and Vuori’s chief executive. “The market is giving us permission to grow, and we believe it is the right thing to do.”

The deal values Vuori at $4 billion, according to the company. It currently operates nine of its own stores, mostly in Southern California and Colorado. Its premium clothing also is available on its website, as well as at most REI and Nordstrom stores.

The 450-employee firm expects to employ more than 1,000 by 2024, said Kudla. It has been profitable since 2017.

A former Ernst & Young accountant who co-founded a staffing company, Kudla worked for a couple of years as a model in Europe after college, which sparked his interest in the apparel industry.

“I was the guy who always ran a T-shirt business out of his garage,” he said.

He launched Vuori seven years ago. The idea was to provide high-quality workout clothing for men with the flexibility to be worn beyond the gym — akin to Lululemon’s niche with women’s yoga-inspired apparel.

“We wanted to build product that redefined the look and feel of activewear for men and make it much more versatile and much more wearable,” said Kudla. “So. whether you’re in the gym or cruising around town on the weekend, the product is going to work for you.”

While the company originally targeted men, Vuori rolled out clothing for women in 2018, and sales are now split 50/50. Lululemon also makes premium active apparel for men, though Kudla believes Lululemon remains best-known as a women’s activewear brand.

In 2019, Vuori raised $45 million from Norwest Venture Partners. Sales tripled last year amidst the pandemic and are on track to increase 140 percent this year, said Kudla, which has helped prove that it can be profitable at scale.

With the new funding, Vuori not only will expand its retail stores but also roll out new products and invest in sustainability. Through partnerships with Climate Neutral and CleanHub, the company aims to offset its carbon and plastic footprints, eliminating 80 percent of plastics from its shipping and supply chain by 2022.

“With its strong consumer engagement, sustainability focus, and sheer growth, we believe Vuori is a leading brand in the attractive activewear market,” said Nagraj Kashyap, managing partner at SoftBank Investment Advisers. “We are delighted to partner with Joe and the Vuori team as they introduce new products to consumers and expand globally.”