Animal startups making it rain cats and dogs as spending rises
Owners spent a record $72.56 billion in last year on their pets
Investors are turning to pet-focused startups as consumers continue to increase their spending on furry friends.
Scratchpay, which provides payment plans for vet care, announced this week that it secured $65 million in debt and equity through a second round of funding. And Because Animals, which is developing pet food with meat grown from a tissue culture rather than farmed animals, announced it had closed a round of seed funding with new investors.
Pet industry spending reached a record $72.56 billion last year, according to the American Pet Products Association. That’s up 4.4 percent from 2017 and 67.9 percent from a decade earlier.
Because Animals sells its probiotic supplements for dogs or cats for $2 per 4.4 oz. bag. It’s also launching a line of organic dog cookies made with nutritional yeast and plans to begin selling its cultured meat pet foods in 2021.
The latest round of investment from KEEN Growth Capital, Draper Associates and SOSV will be key to delivering that product to the market, the company said.
Because Animals CEO, Dr. Shannon Falconer, examines animal cells with tissue scientist, Taylor Brooks, in the startup's lab. (Credit: Because Animals)
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Pet owners are also spending more on pet health care, and they’re insuring more pets as a result.
About 2.16 million pets were insured in the U.S. last year, according to the North American Pet Health Insurance Association. And younger pet owners are running up more debt for their pets’ health — about 42 percent of millennials have gotten into pet-related debt, according to a recent LendingTree study.
Scratchpay said it will use its new equity from TTV Capital, FJ Labs and Struck Capital to invest in product development and work on its proprietary underwriting model. The debt portion of the round included a $50 million warehouse facility with Credit Suisse, which Scratchpay said it will use to meet growing demand.
Scratchpay co-founders Caleb Morse (left) and John Keatley (right), and resident office poodle, Penny (center) (Credit: Scratchplay)
MILLENNIALS RACK UP MORE DEBT FROM PETS, VETS THAN ANY OTHER GENERATION
In addition, pet supply retailer Petco is in talks to buy the pet service startup Wag, Recode reported.
A deal could provide Wag, which has struggled to grow compared to competitors like Rover, some much-needed cash and help the brick-and-mortar Petco a stronger online presence as it competes against newcomers like Chewy, according to the report.
Chewy, which spun off from PetSmart and went public this past summer, announced a 43 percent increase in net sales year-over-year last quarter.
The competition between pet-focused businesses likely won’t slow down anytime soon. The American Pet Products Association is estimating that pet spending will hit $75.38 billion this year, the most ever.