Pandemic puppy boom fetches deals in Silicon Valley

Investors have been bullish on pets long before the pandemic rush to join the rise of “pet parents.” Characterized as a trend that has been building for years, COVID-19 has had a significant impact on how start-up investors view the pet industry, which has a historically checkered past in venture capital.

Labelled as a “hot” category by Silicon Valley VCs, the pet industry’s predicted market value jump from $100 billion to $275 billion over the next 10 years also reflects other consumer trends, like higher spending in animal health and wellness, that are expected to play out big in the pet category.

Rising consumer trends are driven by Millennials, who make up a third of the estimated 90.5 million homes with pets in the U.S. The twin forces of pet ownership and delayed child-rearing mean greater discretionary spending on pet-related expenses – from pet insurance, subscription boxes, and telemedicine.

PharmAbbie is already working closely with existing laboratories and manufacturers to produce in-demand therapeutic medications at a low cost, filling the existing deficit of pet-focused medicines. It is one of the only companies solely focused on addressing the therapeutic medicine market gap in the industry.

Unaffected by hurdles that dog the pharmaceutical industry (insurance mandates, political risks, automatic substitution to generic brands) and with a production process well underway, PharmAbbie presents a leading opportunity in a resilient market.

It’s clear that pet parents are increasingly concerned about the health of their pets. And they’re willing to spend more money than ever before to maximize their health. As pet ownership continues to increase, we can expect the industry to grow with it.

The article linked above is also included below for full reading. For the PharmAbbie investor deck, click here

Pandemic puppy boom fetches deals in Silicon Valley

By James Thorne

August 16, 2021

It’s raining cat and dog deals in startupland.

Venture capital investors are pawing at the door of startups in the pet industry, which have benefited from dog-loving millennials and a surge in animal adoptions during the pandemic.

VC-backed pet companies have attracted more than $1.1 billion so far this year to surpass a high-water mark set in 2019.

Lonely and stuck at home, people around the world began adopting pets en masse last year, leading shelters to report shortages. In the US, about one in five households took in a dog or cat between March 2020 and May 2021, according to a survey by the ASPCA, an animal welfare group.

That boom in pet ownership is now making an impact on how startup investors view the pet industry, which has a long and checkered past with venture capital.

But for investors that have long been bullish on pets, the lockdown bump is merely one act in a much larger story.

“This is a trend that has been building for years,” said Meagan Loyst, an investor at Lerer Hippeau, which was an early backer of BarkBox, the provider of a subscription service for dog products. “Investors are opening their eyes largely because of COVID-19.”

An estimated 90.5 million US homes own a pet, up 5.6 million in the last two years, according to the American Pet Products Association. And spending has increased dramatically. Sales of pet care services, for example, doubled to $5.8 billion over the decade ending in 2017, according to a US Census Bureau report last year.

“Many pet owners have become more comfortable with the idea of spending much more of their discretionary spending on pet-related expenses than what I ever saw back when I was growing up,” said Kevin Colleran, managing director at Slow Ventures.

Earlier this year, Slow Ventures backed pet insurance companies Odie and Pawlicy Advisor. Britain’s Bought By Many, another pet insurance startup, raised $350 million in June to mark the largest pet industry VC deal of 2021, according to PitchBook data.

Nearly a third of millennials are pet owners, the highest percentage of any generation, according to the APPA. The twin forces of pet ownership and delayed child-rearing have given rise to “pet parents,” who are bringing new consumer tastes and gobs of money to the sector, investors say.

“Pets is a hot category. Look at the size of the market predicted to go from $100 billion to $275 billion over the next 10 years,” said Brian Nicholson, managing director at consumer-focused PE firm Sonoma Brands, which recently led a $20 million round for Mixlab, an online pharmacy that partners with local vets.

Venture capital and pets haven’t always mixed. Pets.com was a poster child of the dot-com bubble, a drama that culminated in the company’s liquidation in 2000. SoftBank turned tail on its stake in dog walking startup Wag, reportedly selling its $300 million stake at a loss in 2019.

But Wall Street’s recent embrace of the pet industry could be helping to warm some startup investors to the field. The stocks of pet ecommerce company Chewy and pet insurance company Trupanion have more than tripled since March 2020. BarkBox and pet-sitting app Rover finalized SPAC deals this summer and now have billion-dollar-plus market caps.

Pets adopted during the pandemic can remain part of the family for a decade or more, so the recent bump should last. The return to in-office work and increased travel may spur yet more spending as pet owners seek out dog walkers, sitters and boarding services.

Investors expect that consumer trends—such as the shift to ecommerce and subscription services—will play out in the pet category. Recent startup funding rounds have clustered in areas with obvious counterparts to personal consumption, such as healthy eating, telemedicine, ecommerce and home delivery.

“We want what’s best for ourselves. We want what’s best for our pets,” said Loyst.


Download Our
Investor Deck Now