In 2017, $69.51 billion was spent on pets in the U.S., according to the American Pet Products Association. That’s up 69 percent from one decade prior. As a whole, the global pet market is estimated at $109 billion. A share of that goes to veterinary care, which is a $17 billion industry in the U.S. alone.
So it’s no surprise that the increased spend on pets is reflected in increased funding for pet-related startups.
Funding in pet startups surged by 334 percent to $291.8 million compared to $67.2 million in 2012, according to Crunchbase research. So far, funding totals in pet-related startups have already reached $519.3 million in 2018—78 percent higher than all of last year.
A handful of significant deals since the beginning of the year are mainly responsible for the big jump in funding. In January, on-demand dog walking app Wag made headlines when it raised $300 million from SoftBank Vision Fund. And then in May, another dog-walking and pet sitting service, Rover, brought in $155 million in a tech growth round.
Rover spokesperson Brandie Gonzales points out that the pet space is a large industry with relatively “outdated” business practices.
“There isn’t a segment in the industry that has really embraced technology as much as we think it can,” said Gonzales in an email. “Despite the delay to joining tech and cloud and the internet, the pet industry still grows perpetually faster than the economy in general. We see that as an opportunity, and we’re excited that investors see it as well.”
Rover offers dog walking, drop-in visits, house-sitting, boarding and daycare services.
Rover’s funding round consisted of $125 million in equity financing led by funds and accounts advised by T. Rowe Price Associates, with a $30 million credit facility with Silicon Valley Bank. It plans to use the money to fuel its global expansion, invest in developing its on-demand dog walking service, and add new services such as grooming and training.
The Seattle-based startup has seen its network of sitters and walkers grow more than 100 percent year-over-year with over 200,000 sitters throughout North America today. It’s booking millions of services a quarter, or one service being booked every four seconds, according to Gonzales.
Looking abroad, Rover also recently announced its expansion into Europe—starting with the United Kingdom this July—which represents 25 percent of the global pet care market. The funding will support Rover’s growth into additional European markets later this year, according to Gonzales.
And there are a variety of other pet-focused startups, with some of the most substantial investments made highlighted below.
Howling For Money
On the venture side, Mars Petcare and Digitalis Ventures launched the $100 million Companion Fund to focus exclusively on pet care innovation in areas such as health, diagnostics, nutrition, and services. It’s the first pet care venture capital vehicle, according to Mars’ head of ventures Ben Jacobs, who is also a founder of Whistle, which developed a device and mobile app to monitor a pet’s activity and health. Mars—which is the sole LP in the Companion Fund—acquired Whistle for $115 million in 2016.
The fund’s goal is to help finance and support pet care founders. In addition to the Companion Fund, Mars launched the Leap Venture Studio—the first pet care focused accelerator which was formed in partnership with R/GA Ventures and Found Animals.
“We recognize there’s a lot of innovation in the market around services, nutrition, and therapeutics,” Jacobs said. “We wanted a few different ways to support those startups. Our purpose is to create a better world for pets.”
Jacobs estimates initial investments will range from $2 to $5 million with 10 to 15 multimillion-dollar investments.
Beyond Walking The Dogs
MIT graduate Renaldo Webb founded PetPlate in 2016 to address the need for better quality dog food. As a former operations consultant, Renaldo saw firsthand the inferior ingredients and substandard cooking processes used to make kibble and other mass-market pet food. Inspired by his dog Winston, he launched PetPlate to ensure that his dog, along with millions of other dogs, could easily access fresh-cooked meals that are balanced for a dog’s diet.
While other companies sell meals with human-grade ingredients, PetPlate is the only one making them in a USDA facility, according to CEO Gertrude Allen.
The company has nine full-time employees and plans to double that number by year’s end. Gross revenue has grown 500 percent over the past 12 months, according to Allen. In June, PetPlate also launched two new products. Previously, it sold only beef and turkey meals, but it has added chicken and lamb. It also is working on a rebrand to enhance the customer experience, Allen said, with plans to open a second facility to give it room to scale.
Looking ahead, it’s safe to say that pet-tech related startups will only continue to attract investor interest. But only those barking up the right trees in terms of demand and unique offerings will likely come out ahead.
Editorial note: For fun, here’s a chart showing that dogs are obviously cooler than cats.
Illustration Credit: Li Anne Dias