Dogs and Cats - Living Together: The $75B Pet Economy and Why Los Angeles is Headquarters
Rachel Uranga covers the intersection of business, technology and culture. She is a former Mexico-based market correspondent at Reuters and has worked for several Southern California news outlets, including the Los Angeles Business Journal and the Los Angeles Daily News. She has covered everything from IPOs to immigration. Uranga is a graduate of the Columbia School of Journalism and California State University Northridge. A Los Angeles native, she lives with her husband, son and their felines.
Snuggling on a chair, hovering over a laptop, stretched out on the floor, the long haired-haired, vaguely Calico-looking Koko with his own Instagram feed is a cat influencer in the making. He is also the face of Basepaws, a feline DNA testing service that's trying to tap into the $75 billion spent on pets in the U.S.
Gingi, a sweet feline that died too young, is the inspiration behind startup PrettyLitter, a mail-order cat litter that monitors feline health. And then there's dozens of dogs that inspired DogVacay, a pet sitting app that was sold last year to Rover. Founder Aaron Hirschhorn launched a new service last fall – stem cell storage banks for pets – motivated by his own experience using the regenerative treatment.
According to Pitchbook, pet tech startups in Los Angeles County have pulled in more than $500 million in investments in the last six years. The largest and most well-known came from Softbank Vision Fund for Wag Labs — once the poster child for app-powered pet services. As Wag struggles to compete with venture capital-backed Rover, a slew of other pet tech companies are making their mark offering premium services.
"When I started DogVacay in 2012, I heard venture doesn't belong in pets. I got lots of 'No, the markets are too small,' said Hirschhorn, who has raised $11 million in funding led by Maveron for his latest venture, Gallant. "Now, the first thing that I hear is that people spend so much on their pets."
DogVacay is a pet sitting app that was sold last year to Rover. www.rover.com
Gallant, which launched in the fall, charges a $395 processing fee and $95 a year to store stem cells removed by a veterinarian when pets are spayed or neutered. It aims to make canine life healthier and longer. The company, which has a Federal Drug Administration compliant lab in La Jolla, appeals to veterinarians who can charge a fee for their service and have the promise of pets returning for treatment as they age.
The Pet Economy
Americans love their four-legged friends. More than half of U.S. households own a pet and while ownership rates haven't grown dramatically over the last decade, the amount people willing to spend on their animals has. The American Pet Products Association estimates last year spending topped $75 billion from $45 billion a decade earlier. And the figure is quadruple what it was in 1994.
"We see a ton of interest in the space," said Mike Jones, head of the Santa Monica incubator and investment firm Science Inc. His firm, which invested in DogVacay and Rover, recently backed DogDrop, a flexible canine day care. Jones said they made the calculation that with millennials choosing to have children later in life, animals would play a bigger role. "There's a lot of disposable income that people can spend on pets," he said. "The price point they are willing to spend is way higher."
There's companies like Modern Animal, a Playa Vista-based startup that wants to revamp veterinary clinics for the digital age with telemedicine and other services. It raised $13.5 million in seed funding last fall.
Gallant stores stem cells removed by a veterinarian when pets are spayed or neutered to make canine life healthier and longer..Gallant.com
Scratchpay, a Pasadena-based company that offers financing for veterinary care, scored $65 million in a Series B round in October.
And then there's companies more akin to Gallant like PrettyLitter, a mail-order litter that monitors for health by turning colors when urine shows unusual signs of alkalinity and other factors.
Their growth is part of a larger trend powered by Americans' relationship with their pets, mostly dogs. This humanization, as those in the pet industry like to call it, has driven a push in luxury products and services.
"More and more people are thinking of their pets as parts of their family, as human beings," said Hal Herzog, a professor of psychology at Western Carolina University who has spent decades looking at the relationship between human and animals.
"We spend twice as much on pets per capita as we did 30 years ago."
Where's the money going? On the extravagant side, there's pets spas, canine herbal medicine, Louis Vuitton pet carriers, and diet delivery services. And there's also a booming trend of influencer canines who have their own agents, like Instagram star JiffPom (and his 9.8 million followers).
Pet owners are willing to go to extremes to spoil their dogs and cats -- even wading into unregulated pet technology to keep them healthy.
Unregulated Pet Technology
Founded in 2016 by Anna Skaya, Basepaws promises to tell feline owners with a sample of saliva from their cheek, "the secrets to keeping their health in tip-top shape." The El Segundo-based company presents itself as a health service but operates in a non-regulated zone, along with several other pet companies coming up including PrettyLitter and Gallant.
Skaya, who previously ran Groupon in Russia, originally wanted to name her company 23andMeow. Her proprietary genetic testing provides cat owners with information about their breeds along with hereditary disease. For humans those service are approved by the Federal Drug Administration. Still they aren't intended for diagnostic purposes and there are various levels of evidence to support many of their claims.
PrettyLitter is a mail-order litter that monitors for health by turning colors when urine shows unusual signs of alkalinity and other factors.PrettyLitter.com
And while Skaya and PrettyLitter founder Daniel Rotman say that their services are not diagnostic — merely a tool — they want pet owners looking to improve their animals health to turn to them.
"When you do a DNA test it opens up this world about breeds and diseases," she said. "I always say the cats can't talk but their DNA can." Last year, she clinched $250,000 on Shark Tank and is looking to close a $2.5 million seed round next month.
The service runs $129 and she sees her company, growing to include nutrition products. Hirschhorn, who invested in Basepaws, sees it working for the very same reasons that he believes his own company will take off. "There's this macro trend toward health rather than fighting diseases," Hirschhorn said, adding that it's the same reason humans are taking greater care of themselves.
Skaya has loftier goals: "If we know what diseases they have, we can make sure they are not breeding. We are eradicating genetic diseases."
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Los Angeles is home to thousands of founders working day and often night to create a startup that's the next breakout hit.
Who are the most impressive L.A. founders? To find out, we asked our cohort of dozens of L.A.'s to VCs top weigh in.
Andrew Peterson<p>Andrew Peterson is the co-founder and former chief executive of Signal Sciences, a web application security platform that he founded in 2014 and <a href="https://dot.la/signal-science-snapped-up-for-775m-in-big-l-a-saas-exit-2647256430.html" target="_self">was acquired in 2020 by Fastly in a $775 million deal</a>. Signal Sciences protects web applications from attacks and data breaches for clients like Duo Security, Under Armor and DoorDash.</p><p>Prior to starting Signal Sciences, Peterson worked at Etsy, helping the online marketplace with international growth as a group project manager. Etsy <a href="https://www.fastcompany.com/3056900/how-three-ex-etsy-employees-turned-their-old-employer-into-a-consumer" target="_blank">reportedly became </a>one of Signal Sciences's first customers. Peterson has also served stints as health information management officer at the Clinton Foundation and as a senior product specialist at Google.</p>
Ara Mahdessian<p>Ara Mahdessian is the co-founder of ServiceTitan, a SaaS product for managing a home services business.</p><p>The inspiration for ServiceTitan, Mahdessian's first company, came from watching his parents start their own businesses in building and plumbing, only to struggle with the logistics behind keeping them running, he <a href="https://www.inc.com/magazine/201906/emily-canal/servicetitan-immigrant-inclusion-diversity-best-workplaces-2019.html" target="_blank">told Inc in 2019</a>. Mahdessian and his co-founder Vahe Kuzoyan met while in college, and worked on several consulting projects before starting ServiceTitan, in hopes of aiding small business owners like their parents.</p>
Evan Spiegel<p>Evan Spiegel is the co-founder and chief executive officer of Snap Inc., the Venice-based company known for its app Snapchat. He's also one of the youngest billionaires in the world, launching Snapchat while still an undergraduate at Stanford. </p><p>SnapChat, the company's app, has recently been taking on rival TikTok <a href="https://dot.la/snap-spotlight-2649022645.html" data-linked-post="2649022645" target="_blank">with a new feature</a> and a program meant to attract creators to its platform. And it is been at the center of a larger national debate on the power of big tech. </p>
Spencer Rascoff<p>Spencer Rascoff is the founder of several companies, including dot.LA. He started his career as an investment banker at Goldman Sachs, later leaving to co-found travel website Hotwire. After serving as vice president of lodging at Expedia, he went on to found Zillow, an online real estate marketplace that went public in 2011.</p><p>Rascoff's most recent project is Pacaso, a marketplace for buying, selling and co-owning a second home.</p>
Tim Ellis<p>Tim Ellis is the co-founder and chief executive of Relativity Space, an autonomous rocket factory and launch services leader for satellite constellations. He is the youngest member on the National Space Council Users Advisory Group and serves on the World Economic Forum as a "technology pioneer."</p><p>Before founding Relativity Space, Ellis studied aerospace engineering at the University of Southern California and interned at Masten Space Systems and Blue Origin, where he worked after graduation. He was a propulsion engineer and brought metal 3D printing in-house to the company.</p>
Travis Schneider<p>Travis Schneider is the co-founder and co-chief executive of PatientPop, a practice growth platform for healthcare providers. He founded the company with Luke Kervin in 2014. <br><br>The two have founded three companies together, including ShopNation, a fashion shopping engine that was later acquired by the Meredith Commerce Network.</p>
Luke Kervin<p>Luke Kervin is the other co-founder and co-chief of PatientPop. He is a serial entrepreneur — his first venture was Starbrand Media, which was acquired by Popsugar in May 2008. <br><br>Kervin and Schneider then founded ShopNation, and when it was acquired in 2012, Kervin served as the general manager and vice president at the Meredith Commerce Network for a few years before leaving to found PatientPop.</p><p>Kervin had the idea for PatientPop when he and his wife were expecting their first child, he told <a href="http://voyagela.com/interview/meet-luke-kervin-patientpop-santa-monica/" target="_blank" rel="noopener noreferrer">VoyageLA</a>. They were frustrated with how the healthcare system wasn't focused on the consumers it was meant to serve. So in 2014, he and Schneider created PatientPop.</p>
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