First and foremost, we hope you feel safe and heard in the current moment. We recognize the severe reckoning our country is facing right now, and we stand in solidarity with the Black community. Over the last few months our country has faced a lot of pain, from police brutality to the COVID-19 pandemic, and we hope to play a meaningful part in harnessing this moment as a catalyst for positive action.
While much of our focus over the past few months has been spent on these important and devastating issues, we continue to spend time investing in founders, supporting young startup companies, and learning about emerging themes and sectors. Along those lines, this Thursday we invite you to join us for a discussion focused on the momentum and innovation in the pet space.
In the same vein, this week we're excited to share some of the formative work our MBA intern, Adam Lebovitz, has been doing in helping us better understand and refine our thesis on the evolving pet landscape.
We're excited to get together leading founders and CEOs from Wag!, Embark, Good Dog, Pet Plate, Fable, Companion, Whistle, GoodPup, Pumpkin, Celevity, Fuzzy Pet Health, Because Animals and some of the more prominent venture investors in the pet space together as speakers for the event.
What: 'Pets!: A Peak Inside the Pet Boom', a virtual mini-conference When: Thursday, June 18th from 12-2pm PST Where: Zoom link to be shared with those who RSVP here. Audience: 150-200 people building, investing, or just plain interested in the Pet Space.
While the conference is free admission, we strongly encourage all who attend to make a donation to one of these charities (or others) to help drive positive change.
Beaux and Paws: Beaux and Paws, founded by 13-year old Sir Darius, is raising money to help Darius deliver his hand made bow ties personally, volunteer, attend adoption events, and highlight adoptable dogs and cats on his social media to help them find homes faster. (Donate Here)
Equal Justice Initiative: Founded by leading criminal justice reform lawyer Bryan Stevenson, EJI provides research and recommendations to assist advocates and policymakers in the critically important work of criminal justice reform. (Donate Here)
Campaign Zero: Campaign Zero is a comprehensive platform of research-based policy solutions to end police brutality in America. (Donate Here)
*Can't make it, but know someone who would be a good fit? Please forward them the event info, or reach out to firstname.lastname@example.org to make sure they get on the list.*
Pets: Rising Ownership and Willingness to Spend Drive Opportunities for Innovation
To say that everything has changed with COVID-19 is an understatement. Speculation around systemic shifts in how we work, how we socialize and dine, how we consume and how we spend have populated the internet as Americans have sheltered-in-place. Over 50% of the world's population has experienced some version of social distancing or restricted movement, and products that enable remote connectivity have flourished, while those dependent on IRL experiences have suffered.
In a world where many of us haven't seen our best friends in well-over a month and families have begun to bicker, we've also seen people turn to man's best friend as a source of companionship. By late March, New York City was running out of dogs to foster and the pet industry had exploded (for instance, Chewy's (NYSE: CHWY) stock up nearly ~60% this year).
Pet ownership had already been on the rise, up 56% since 1988, with more households now having pets than children. The global pet care market was estimated at $131.7B in 2016, and estimates project the market to top $250B by 2025. Growth has been driven by an increase in aging owners (40% of those 70+ own pets), millennial owners (who are waiting longer to have children; now 7 in 10 own a pet), and an increase in multi-pet, multicultural and Hispanic households with pets. Even if the majority COVID foster households don't convert to permanent pet owners, industry growth was projected before the pandemic and can be expected to continue after.
Via American Pet Products Association
Opportunities are magnified by increased humanization of pets -- treating and spending on them as a true member of the family. As Sophie Bakalar, founder of Slow's portfolio company Fable, has noted, Americans love spending on pets because it's both a selfless and selfish endeavor; we get to feel good about making another being's life better, while indulging in luxury ourselves. As owners continue to perceive their pets as members of the family and younger owners view pet ownership as a training ground for raising children (82% of millenials believing that to be the case), growing willingness to pay can be expected.
Perhaps most interestingly, pet spending is recession-proof. Between 2007 and 2011, the share of American households spending on pets varied by less than 1%. And while people spent markedly less at restaurants during the recession, spending on pet food increased. By 2011, American households spent more on their pets annually than they spent on alcohol ($456), mens and boys clothing ($404), or reading materials ($115).
So where does this spending go? Broadly speaking, we can slice the pet industry into Consumer and Healthcare segments, subsequently dividing the market from there. Consumer categories include products such as BarkBox* (subscription box of dog toys and treats) and Fable* (leashes, beds, bowls, crates, etc.), services like Wag!* (on-demand dog walking/services) and DogDrop (next-gen doggy daycare), food like The Farmer's Dog (human-grade dog food) and Butternut Box (UK, DTC fresh dog food) and technology like Whistle* (health tracker and GPS) and Fi (activity tracker). And while there has been ample investment and innovation in the space, there remains room to grow.
So with a growing customer base and sentiment shifts that should further expand willingness to pay, excitement around opportunities in the pet industry is well-founded. But where do they actually exist? Recent years have seen money pour into pet insurance, innovation in DTC pet food and a reimagination of the veterinary care experience, looking to capitalize on marco-tailwinds. A few areas we're interested in? The continued expansion of pet food, products and services targeted at non-dog companion animals, pet health and wellness, digital veterinary care, pet happiness and pet services. We'll dive into many of these topics at the conference this Thursday…until then, be well.