Boston-based Gympact (@gympact) has raised $850K to continue development of its platform for incentivizing healthy lifestyles using negative reinforcement in the form of monetary penalties.

According to TechCrunch, the round is led by Mike Hirshland (@VCMike) of Resolute.vc and includes TEEC Angel Fund (@TEECAngel),

Brightcove CTO Bob Mason, and others. As part of the round, TechStars Boston Managing Director Katie Rae will be joining the startup’s board of directors.

I covered Gympact (which is changing its name to just Pact, Inc, though the app will still be known as GymPact) when it launched earlier this year and was selected to participate in the most recent class of startups at TechStars Boston. Pact was founded by two former-Harvard undergrads who stumbled upon the interesting concept of negative motivation while taking a behavioral economics class together which intrigued them so much they turned the idea into an innovative mobile application and now find themselves with a successful business.

“Behavioral economics show that if you tie cash incentives to things that are concrete and easy to achieve like getting to the gym, its very effective,” said Yifan Zhang, (who co-founded GymPact with Geoff Oberhofer), in an interview with the NYTimes. “People don’t like losing money, it’s one of the strongest motivators, much more than winning money.”

Users who successfully meet their goals each week are awarded their share of the fines paid by the users who did not meet their goals. Earnings are collected based on how many days each user commits to go per week, so if you signed up for three days you are allotted “three portions” of the winnings.

 

 

As of the time of the NYTimes post, users were collecting approximately 50 cents per visit, but it varies. Once the app scales up, the GymPact team expects payout rates to stabilize between 50 cents and $1 per visit. Money earned accumulates in a PayPal account and users can draw upon that account once it hits $10, with GymPact taking a $1 fee for each withdrawal.

To ensure users are actually working out the app asks them to check-in when they arrive at their gym and requires them to stay at least 30-minutes to ensure they aren’t simply doing a ‘drive-by check-in’ to avoid being fined.

Gympact has apparently seen a remarkable success rate in its first few months, with users meeting their weekly workout commitment 86-percent of the time, and they have already distributed $100K in rewards after taking into consideration all fees taken by the company.

Fresh off of a successful TechStars Boston experience and flush with some cash in the bank, the company is now looking to the future. The plan is to focus on taking the platform they have validated beyond the gym and apply their promising model for healthy incentives to every type of physical activity by incorporating data collected from other apps and wearable sensors. GymPact has told TechCrunch to stay tuned for several major announcements of new partnerships in August. Gympact is also currently in private beta testing on Android, having been available only for iOS to date.

This is an ambitious play and precisely what I suggested the company do in my initial post covering their launch. It basically amounts to becoming the financial backbone for the Quantified Self movement, which is an exciting vision with major potential implications.

I have thought a lot about the various incentive schemes being developed by numerous startups in an ever increasingly crowded sub-market of the massive health and wellness sector. One thing which seems clear is that, other than peer pressure, there is no better motivator than cash, and as far as I can tell the threat of losing money is a far more powerful motivator than the potential to earn.