Pets are increasingly considered as irreplaceable family members, especially among millennials who are willing to spend more on improving their pet’s health and quality of life. Even if a person is restrained from owning a pet due to various reasons (such as financial, time, and other constraints), on-demand pet care tech can fulfill the desire to have the company of a pet only in their leisure time, all while earning an income. As a result, on-demand pet care services have emerged to digitally connect pet owners to a network of pet care service providers such as 1) mobile-based platforms that connect pet owners with dog walkers, pet boarding, pet sitting, etc., and 2) digital veterinary platforms that provide on-demand video consultation services.
Demand for on-demand pet care, such as dog walking and pet sitting, declined due to lockdowns and social distancing rules.
Rover, one of the largest players in the industry, laid off 41% of its workforce in March 2020 however, revenue increased during the latter part of the year amidst increased pet adoption during the pandemic
Demand for veterinary telehealth services have spiked, with several operators ( Fuzzy Vet Health, Bond Vet, FirstVet, and AirVet), reporting a substantial revenue growth
The on-demand pet care market comprises pet care service companies and veterinary telehealth services that digitally connect pet owners with pet service providers. Wag and Rover are the leading startups in the on-demand pet care services segment, and the companies do not face competition from established traditional players. Wag also remains a dominant player in the on-demand veterinary telehealth services segment along with WhiskerDocs; however, startups in this segment face competition from a few hospitals and pet retailers. Most companies in the industry are at the seed stage due to the nascent nature of the industry.
The digital pet care market consists of several disruptors that operate in on-demand pet care services and on-demand veterinary telehealth services, the largest being Wag and Rover. Given the success of these two companies (with more than USD 300 million in funds raised, respectively) many startups have emerged in the market offering various services over the past couple of years. While few companies have remained in the market, many have succeeded by capitalizing on the concept of a gig economy. Apart from a few leading players, funding of other startups has typically been less than USD 50 million, and they have yet to see growth in the on-demand pet care market space.
Rover, is a pet-care service provider which operates through online and mobile platforms connecting pet-owners with pet-care service providers that offer pet boarding and sitting services, dog daycare, dog-walking, and drop-in visits. As of February 2021, the company reportedly served more than two million pet-owners and 500,000 service providers across North America and Europe. In Q2 2019, Rover recorded sales of nearly five times that of Wag’s with almost identical customer retention rates, which indicated Rover’s leading position.
In May 2018, Rover raised USD 155 million led by T. Rowe Price (a global asset management firm), marking its largest funding round. The funds were utilized for accelerating expansion into Europe, entering Latin American region and expanding into cat-care services (in April 2019). In line with its expansion strategies, Rover also acquired DogBuddy (a UK-based dog walking, boarding, and daycare company) in October 2018. With this acquisition, Rover marked its presence in the UK, France, Italy, Germany, and several other EU countries. In November 2020, the company entered into partnership with Walmart, where Walmart.com promotes Rover under Walmart Petcare.
In February 2021, Rover announced plans to become a public company by merging with Nebula Caravel Acquisition corp., a SPAC (Special Purpose Acquisition Company) sponsored by True Wind Capital. The transaction is expected to be completed during the first half of 2021 and the combined entity will be renamed as Rover Group and will trade in the Nasdaq under the ticker “ROVR”. The combined company is expected to have a market capitalisation of approximately USD 1.63 billion and the transaction will provide USD 325 million in fresh capital to Rover, which is to be used to fund market expansion and product development.
Rover’s revenues dropped 49% YoY to USD 48 million in 2020 amid the pandemic, despite a growth of 35% YoY to USD 95 million in 2019. The pandemic also led to a drop in bookings during 2020, to 2.4 million from 4.2 million in 2019, resulting in a decline in gross booking value to USD 236 million in 2020 from USD 436 million in 2019. Rover laid off 41% of its staff (approximately 200 employees) in March 2020 due to the pandemic. The company expects bookings to recover in 2021 to 3.9 million with a subsequent increase to 8.1 million by 2022, driven by the gradual recovery in business activities and increased pet ownership.
Full-year 2021 revenue guidance was slightly revised in Q3 2021 to USD 106–110 million from the guidance of USD 102–110 million issued in August 2021, implying a YoY growth of 120.8%–129.2% from FY2020. Adjusted EBITDA guidance for 2021 was upgraded to USD 6–9 million in Q3 2021 (implied YoY growth of USD 30–33 million), compared to the previous guidance of break-even to slightly positive adjusted EBITDA.
On-demand pet care services:
On-demand veterinary telehealth services:
The on-demand pet care tech space has yet to see major interest from traditional or established companies. However, in the on-demand veterinary services segment, a few hospitals have entered the market through partnerships with companies providing telemedicine services. Most of these services are, however, provided to existing clients as a premium service. Apart from veterinary hospitals, a pet retailer (PetCo) has also entered the market by acquiring a pet telehealth platform.
In-house product development
Banfield Pet Hospitals, established in 1955, is a provider of veterinary services with a network of more than 1,000 hospitals in over 40 states. The company provides a range of veterinary services such as vaccinations, parasite control, dental care, nutrition, etc., along with a twice-a-year physical examination. In June 2019, the Banfield Pet Hospitals network launched a telehealth service called Vet Chat, marking the first appearance of a major pet retailer in the on-demand veterinary service industry. The new service offers on-demand access to pet care advice for its Optimum Wellness Plan clients. Banfield’s telemedicine app was developed by Ask.Vet, a company that provides veterinary telemedicine services.
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