Zoe Chew

July 28, 2022

Pet Tech is Booming: Trends & Opportunties

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Issue #19

The pet industry is a massive sector for tech opportunities. Pet owners spent over $100 billion in 2021. Caring for pets is increasingly being humanized. “Furry consumers” now take supplements, wear smart devices, track sleep, and travel.

New waves of startups are capitalizing on this market need by developing new product strategies. We’re seeing the Uber for dog walking like Wag!; Warby Parker for dogs; Fitbit but for dogs like Fi dog collar; and HelloFresh for pets like Ollie. 

In this analysis, we’ll focus on top startups that are disrupting the pet tech market–how they are differentiated, what unique problems they solve, how they create multiple revenue streams and untapped opportunities.

1. Key trends

(1) E-commerce and marketplace models are creating winners:

  • We’re noticing e-commerce and marketplace models are creating pet tech winners. This is represented by billion-dollar IPOs in recent years.
  • Petco, which specializes in the health & wellness of pets, went public in Jan 2021, pushing its IPO value close to $4 billion.
  • BARK, a monthly subscription box for dog toys, treats, and goodies, went public in June 2021 at a market value of $2.4 billion.
  • Chewy.com (an online pet product retailer) was acquired by PetSmart for $3 billion.
  • Wag Labs, an on-demand platform for dog walking, pet sitting, veterinary care, and training services, went public via $350M SPAC in Feb 2022.

(2) Online shopping represents the most lucrative sector for the pet industry: 

  • In the U.S., consumers mostly shop for pet goods from Amazon, PetSmart, Petco, and Chewy.com; and from Alibaba and JD.com in China.
  • Top leading online retailers for pet supplies in 2021, ranked by sales: Amazon ($20.7B); Alibaba ($16.1B); JD.com ($10.2B); PetSmart ($8.1B).
  • Globally, most pet parents shop for product categories such as (1) pet foods & treats, (2) vet care products, (3) supplies, animals, and OTC medicine. 

(3) Rise of digital health and telemedicine in the pet industry:

  • Pet telehealth is becoming a hot spot for startup creation. This has driven the rise of digital animal healthcare, where clients can get medical consultation, treatment, and medicines online.
  • Bond Vet offers urgent care, primary care, vaccinations, check-ups, and preventative medicine for pets. The company closed $170M in 2021. 
  • The Vets brings vet care to your home by offering on-site sick visits, exams, diagnosis, blood work, etc. The company closed $40M in 2022.
  • Dutch ($20M Series A) offers 24-hour online vet consultations, customized treatments, and medical prescriptions for pets.
  • UK’s online pet shop Pets at Home acquired a pet telehealth startup–The Vet Connection for £15M.

(4) Connected devices and wearables for pets are becoming popular:

  • Companies are investing in hardware and developing biometrics devices to help pet owners understand pets’ health and ensure safety. 
  • Fi Smart Dog Collar tracks your dog’s location, activity level, and sleep quality.
  • Japan’s Catlog is a smart collar for cats that captures weight, excretion, water, activity, sleep, and grooming.
  • Inovoxia’s dog collar tracks heart rate, respiratory score, and sleep.
  • Inupathy tracks heart rate and analyzes the psychological and mental conditions of dogs.

(5) Insurtech companies are tapping into pet insurance:

  • Insurtech companies are expanding their product lines beyond home, life, auto insurance and entering the pet insurance segment.
  • U.S. insurtech unicorn, Lemonade launched pet insurance in 2020.
  • Hong Kong insurtech OneDegree entered the pet industry by offering medical coverage for pets through Pawrfect Care.
  • Sweden’s Lassie is an insurance platform that focuses on dogs and cats. The company offers compensation for veterinary care and educational content to prevent injuries and diseases.

(6) Rise of longevity pet tech:

  • We’re starting to see “anti-aging” solutions for pets, helping animals to live longer, reducing chronic diseases, and extending the lifespan of human best friends.
  • Rejuvenate Bio uses gene therapy to reverse aging for humans and dogs by eliminating age-related diseases such as heart failure, kidney failure, Type 2 diabetes, and obesity.
  • Loyal develops clinical-stage veterinary medicine to delay aging in dogs and extend the lifespan of dogs’ lives.

(7) Pet foods are reaching human standard:

  • Startups are going after the concept of “HelloFresh for pets”, veterinarian-designed formula, nutrient-dense, allergy-friendly, and plant-based foods to satisfy consumers’ demand for higher quality pet foods.
  • The Farmer’s Dog’s recipes are made with real meat & veggies, freshly cooked and conveniently delivered.
  • Shark Tank-featured Wild Earth is creating plant-based protein dog foods. 
  • Smalls offers human-grade, high-protein, and healthy cat foods.

(8) Rise of Latin America’s online pet retailers:

  • Latin America is one of the emerging markets for pet tech startups, specifically in the online e-commerce category. This is driven by the regions’ high pet ownership: 80% of survey respondents in Argentina and Mexico own a pet; compared to 75% in Brazil.
  • Petz is one of the biggest online pet shops in Brazil. The company went public in 2020
  • Zee.dog sells collars, leashes, chew toys and food for dogs and cats. The company was acquired by Petz for $163.3M.
  • Petlove offers a wide range of pet care products and services. The company recently closed $150M from Softbank and Riverwood.

(9) Mental health for pets are starting to emerge:

  • More than 70% of dogs suffer from anxiety, e.g. noise sensitivity, fear of strangers, and fear of separation — which can lead to aggression, nervousness, misbehaving urination, and furniture damage.
  • Pet owners are prioritizing the well-being of their pets more than ever before. Therefore, startups are starting to create solutions that make dogs’ lives less stressful and calmer. 
  • Players in this space: (1) ZenCrate’s anti-anxiety dog cage, (2) Dandy’s anxiety care vitamin to calm nervous dogs, (3) PupPod Rocker for noise-sensitive dogs.

(10) Brands are positioned as “luxury goods for pets”:

  • Manufacturers of pet supplies such as automatic feeders, cat litter boxes, and pet toys are tapping into the “luxury pet goods” trends. This strategy increases perceived value of existing product categories and boosts revenue margin.
  • Petcube’s smart laser toy costs $229 to entertain your cats.
  • Whisker develops robot cat litter that cleans itself and sells them for $649 each.
  • Whistle’s health+GPS tracker costs $179.95 to help you understand a pet's health through data.

(11) Millennials love fur kids:

  • Consumers are adopting pets during the pandemic due to isolation and the need for companionship. A survey showed pet ownership grew by 13% (Gen X), 24% (Millennials), 26% (Gen Z), and 5% (Baby Boomers) in the U.S.
  • YPulse’s study showed that 76% of millennials are pet parents.
  • As more millennials delay marriage, many are spending more on pets. Top spending category, ranked: Toys (51%), food treats (49%), grooming items (34%), high-end food (30%), new bed (24%), supplements (19%). Source: YPulse

2. Market players, competitors & databases

👉 Link to database

3. What problems do they solve?

(1) Reduce vet costs:

  • In the U.S., it costs $150 to $7,000 for dog surgery and $200-$500/year for routine pet care. Almost half of the pet owners would turn to credit cards for unexpected medical expenses.
  • Pet insurtech exists to lower the healthcare costs of pets through insurance coverage.
  • Wagmo provides emergency vet coverage (e.g. illness, injuries, chronic health and telemedicine), mobile claim submission and processes insurance claims within 2 weeks.
  • Figo offers 15+ comprehensive coverage, 24/7 live vet support, fast claim within 3 business days, and mobile-first experience.
  • Petplan offers a self-service portal to help pet owners manage claims and payments online.

(2) Veterinarian shortage:

  • By 2030, 75 million pets will not get sufficient medical care due to severe veterinarian shortage. Mismatch of supply and demand is also happening–with only 2.7% of new veterinarians entering the market at a 6.5% increase of vet appointments in 2021 due to increased pet ownership driven by the pandemic.
  • Pet startups solve this by curating veterinary professionals and reducing the proximity of vet care through digital health.
  • Fuzzy offers 24/7 live chat for urgent care, personalized treatment, medications and vet-recommended products & discounts through its membership.
  • Airvet provides access to over 3,000 licensed vets, 24/7 virtual care and a $3,000 life-saving emergency fund for pet parents.
  • Small Door Veterinary solves this by using an all-in-one approach–combining telemedicine with an in-person facility, on-site lab tests, and comprehensive pet care (e.g. routine exams, radiology, dentistry, dermatology, surgery & mental health).

(3) Connecting dog and cat owners with pet care for convenience:

  • Pet parents are living a busy lifestyle. Solutions like “Airbnb for Pets” can fill the gap when pet owners are away from home for work, travel, holidays, etc.
  • Rover helps you find vetted dog sitters who offer dog boarding, dog walking, house sitting, or doggy daycare.
  • PetSitter.com solves this by building an “UpWork for pet owners”. Users can hire professional local pet sitters based on hourly rates.
  • Wag! offers on-demand or pre-scheduled pet caregivers booking for various dog care needs.

(4) Nutrient deficiency:

  • Commercial pet foods lack key nutrients such as thiamine that could cause serious health issues and fatality, according to medical research. New startups are filling the gaps in pets’ health by formulating supplements and human-grade foods.
  • Native Pet creates organic supplements for dogs and cats, targeting health areas such as digestion, bone, skin, and multivitamins.
  • Ollie makes vet-formulated dog foods that are free of artificial flavors, fillers, and processing. Ollie differentiates by offering customizable meal plans and online delivery.
  • Wolf Spring sells all-natural and plant-based vitamin drinks for dogs packed with Omega-3, antioxidants, iron, and minerals.

(5) Reducing cancer-related death:

  • Cancer is the number one cause of death in 47% of dogs aged over ten, and 32% of cats. Cancer in dogs is more common than in cats–about 1 in every 4 dogs will be diagnosed with cancer. 
  • New companies are focusing on preventative care and cancer treatment solutions to extend the lifespan of family pets.
  • FidoCure replaced the 30-year-old chemotherapy technology with genetic testing and precision oncology treatments, i.e. targeted therapies based on DNA sequencing analysis.
  • PetDx ($62M Series B, 2021) specializes in “liquid biopsy” blood tests that can detect 30 different types of dog cancers.

4. Business models & monetization

(1) Vertically-integrated social network as sales & monetization channel:

  • Boqii primarily operates as an e-commerce “Boqii Mall” and has an integrated social app “Boqii Pet” that connects pet owners to share their experiences as pet parents.
  • The social component is part of Boqii’s omnichannel sales strategy. It streamlines holistic customer experience, i.e. across web-online-offline-mobile channels.
  • For example, users can access the mobile app for (1) social feeds, (2) content creation, (3) shopping, and (4) pet care services–all in one place.

(2) Direct-to-consumer (D2C):

  • Companies bypass online retailers (e.g. Amazon, Walmart) to self-owned platforms by integrating e-commerce storefront, branding, customer base, distribution and marketing analytics.
  • Top D2C product categories include meal delivery (NomNomNow), supplement (Dandy), medication (Mixlab), and pet toys and treats (BarkBox).
  • This model gives you the autonomy to control product development, maintain customer relationships & brand loyalty and offer bundle pricing which charges higher price tags and attracts more customers who’re looking for deals.
  • Example: Olllie’s dog meal plan subscription starts from $1.57 a meal. Jinx’s essential premium dog food bundle costs $42.50. Buddy Pet sells hemp seed oil that costs $95.00 AUD for its “Family Pack'' bundle.

(3) Recurring subscription:

  • Most common in veterinary telehealth startups where they monetize “access to medical support” in the form of recurring membership.
  • Airvet’s membership costs $30/month including 24/7 expert calls, premium virtual care, and a $3,000 life-saving emergency fund.
  • Fuzzy Health combines e-commerce and vet care into a single membership that costs $79/year.
  • Dutch charges $15/month for video chats with licensed vets, treatment plans, and free prescription shipping. 

(4) Marketplace transaction fees:

  • As a two-sided marketplace, Rover connects pet parents who’re seeking on-demand pet care with providers who want to make extra income by becoming dog walkers/pet sitters. About 75 percent of its business comes from overnight boarding.
  • Rover takes a 20% - 25% service fee from providers for each booking. In other words, sitters typically take home 80% of their earnings per booking.
  • Rover also expanded its revenue streams through (1) e-commerce “The Rover Store” which sells pet essentials and gifts, (2) sitter’s background check badge that costs $25.

(5) Content productization:

  • Most connected smart devices don't just sell hardware. They bundle hardware and software in their offerings, and provide helpful information for pet owners. E.g. Whistle sells content in the form of activity stats, pet health insights and weekly reports. Litter-Robot, a self-cleaning cat litter box provides smart monitoring, cat excretion behaviors, and health tracking in the app.
  • You can also sell educational content to pet parents. E.g. GoodPup charges $27/week to access personalized dog training content & 1:1 training sessions with dog trainers. Dogo Premium costs $23.99/year, including unlimited tricks, video content and visual instructions.

5. What are the next big things?

(1) Wearable devices meet pet insurance:

  • By 2028, the pet insurance industry will be worth $19.56 Billion. Pet wearables such as health trackers and GPS-enabled collars are already a $2.5 Billion market in 2020.
  • As pet owners are increasing their willingness to spend on health insurance and pet devices, new startups could tap into “telematics for dogs and cats”.
  • For example, smart collars that track pets’ health data (e.g. activity, sleep, and heart rate) can be utilized for pet insurance underwriting and claims processing. 
  • In other words, pet owners will get insurance discounts or lower insurance premiums if they keep their pets healthy.

(2) More Fintech & consumer payment will emerge in the pet industry:

  • We’re noticing pet care companies breaking into the fintech market by targeting digital banking, lending and insurance solutions for pet parents.
  • Petco, one of the largest online pet stores, entered the embedded finance market by offering Petco Pay–a credit card for pet owners. Shoppers can use it for spending, rewards, gifts, and donations–natively without leaving the website.
  • Scratchpay works with veterinary clinics to make vet care affordable and increase revenue for practitioners via its payment plans. The company made $5.5 million revenue in 2019 by focusing on vet financing.
  • New startups could build a “digital card for pet lovers”. Use cases: (1) “pet cards” for employee benefits, (2) pet shoppers loyalty cards like CardBlanch which organize loyalty programs in one card and automatically apply merchant discounts for shoppers.

(3) Digital content for pets:

  • There are massive opportunities to bring together digital content, media, influencers, and communities in the pet industry. A survey showed that: 65% post their pets on social media 2x per week; and 55% care more about their pets being liked.
  • On the social media front, The Dodo, one of the largest animal content sites, was valued at between $40 and 50 million. TikTok #pet hashtag has 53 billion views. Instagram “petfluencers” like @jiffpom have 9.7M followers. 
  • New startups could look into: (1) online communities or membership clubs for pet lovers to access curated great deals, (2) online photo albums like Shutterfly for pets.

(4) D2C brands will see a new category of pet goods:

  • There are a host of D2C brands that create new products for dogs and cats to live like humans. Adoption for pet travel accessories, organic pet food, and meal delivery is already happening.
  • As pets are increasingly being "humanized", more demand for pet products that enhance the quality of life and raise the pets' identity will become more popular.
  • Potential new product categories: (1) Smart bed for dogs that self-adjust based on sleep movement, (2) Connected massage tool for pets, (3) Exercise tool for pets that improves mobility & joint health.

(5) Pet industry will see Web3 solutions:

  • Web3 is starting to encompass different areas of consumer lifestyle including metaverse real estate, digital parenthood, tickets for sporting events, in-game assets, and pet ownership and adoption.
  • While many “metaverse pets” are focusing on digital asset ownership, Web3 pet tech could leverage communities and incentives to contribute to social goods.
  • For example, (1) incentivize pet lovers with community tokens to help find missing pets in the local neighborhood, (2) let pet lovers own “fractional shares” of a social impact website, i.e. each member will be rewarded every time they contribute to social impact campaigns such as anti-cruelty, saving homeless pets, crowdfunding for a medical fund, etc.

(6) Food tech and pet tech will come together:

  • Eco-friendly pet foods are getting a sales boost of 57% in the UK. 83% of millennials prioritize sustainability when it comes to pet food purchases. 
  • These trends validated that consumers are increasingly caring about the impact and will continue to adopt sustainable pet foods in the future.
  • Startups could tap into alternative pet proteins, bioengineered foods, and upcycling technology to add value to food waste and enhance nutrition.
  • For example, create insect proteins for pets (Yora), manufacture meat using microbes and fermentation process (Calysta), and plant-based seafood like Finless Food but for pets. 

(7) The enterprise model for vet care:

  • Consumer healthcare is starting to see the rise of the enterprise model and creating successful players in industries like mental health (Spring Health), fertility (Carrot Fertility), and parenthood (Maven Clinic).
  • Enterprise model is a great way to retain talented employees, reduce vet costs, and help pet parents access vet care through their companies. However, we have yet to see a host of pet tech companies using the “direct-to-enterprise” model and differentiate from competitors by focusing on “vet care at workplace”.
  • For vet care benefits to work, startups could combine these components: a digital vet clinic model (24/7 access to vet consultation), on-site pet visits, digital health cards (for employees to spend on vet care), pet insurance benefits, and pet wellness at the workplace.

(8) Death care for pets:

  • The pet funeral industry has generated $646.0 million in revenue in 2021. This is driven by pet owners’ willingness to spend on cremation services, memorial and products (urns, jewellery, replica plush, artwork) to mourn the death of their pets.
  • The future of pet tech will also transform pet funeral services through digitization. Startups could tap into digital funeral services, online ashes delivery (EverAfter), e-commerce (DailyPaws), and artist marketplaces for painting (unbundle this segment from Etsy).
  • We could also foresee gene research for pets to emerge. While ethical questions remain, Sinogene is a biotech company that offers gene cloning of deceased pets. The company charges £28,600 to duplicate a cat and £43,500 for a dog.

(9) Adoption of digital health clinic model for veterinarians:

  • Pet healthcare will become a popular segment for innovation. In fact, North America is the largest market for animal healthcare and is expected to generate $76.82B by 2030.
  • As pet healthcare is going digital, more solutions like “Calendly for veterinarians” or “SaaS for animal clinics” are needed. Vet professionals can plug and play their practices digitally without building the tech from scratch.
  • Players tackling this space: (1) Televet helps vet professionals manage patient scheduling, payment & communication. (2) Loyal optimizes practitioners’ efficiency by building an end-to-end digital health system. (3) Airvet’s all-in-one platform helps integrate veterinarians' workflow digitally.
  • Other use cases where new solutions could rise: (1) marketing software for vets to drive traffic to their online vet platform, (2) marketplaces of experts to help vet professionals scale their practices and increase revenue, (3) embedded insurance solutions that allow online vet platforms to offer pet insurance natively.