Rover Raises $40M in Race to Control Dog Services Marketplace

Xconomy Seattle — 

We live in a Golden Age of pet ownership, and venture-backed dog-care marketplaces are raking in tens of millions of dollars a year by connecting dog owners with trustworthy people to walk and care for their furkids.

The alpha dog appears to be Seattle-based, which announced $40 million in new funding on Monday from prior investors Foundry Group, Menlo Ventures, and Madrona Venture Group. The company has raised $91.5 million since its founding in 2011 by Greg Gottesman, who was a managing director at Madrona. (He’s now a venture partner.)

That’s a long leash of funding for dog sitting, but it’s a big and growing industry. More than 54 million U.S. households have a dog according to a recent industry group pet owner survey. People spend hundreds or thousands of dollars a year to have other people take care of their pets.

Rover says it’s on pace to process $100 million in billings this year. Dog owners use the service to book walks and in-home boarding with vetted pet sitters. Rover makes money by connecting sitters and owners, taking a 20 to 22 percent of each transaction, and providing additional services such as insurance and mobile apps to give pet owners real-time updates on their pets’ activities.

“We are not yet profitable but we have clear line of sight to profitability,” Rover CEO Aaron Easterly says via e-mail. “We currently think we will hit that milestone by the end of next year, but of course that is not set in stone and may change.”

Venky Ganesan, managing director at Menlo Ventures, compares Rover to other “category-defining” companies his firm has backed, such as Uber, Siri, Hotmail, and Gilead Sciences.

“Rover is on that trajectory and that’s why we decided to double down and go all in on this investment,” Ganesan says in a news release.

Rover’s main competitor—in addition to finding dog care through kennels, friends, and local pet services companies—is DogVacay, based in Santa Monica, CA.

The two companies are in a dog-eat-dog battle to control the marketplace for dog services in the U.S.. Americans spent $5.41 billion in 2015 on pet grooming and boarding, part of nearly $60.3 billion spent on pets in total, according to the American Pet Products Association.

Rover and DogVacay have a lot in common, having been founded at around the same time and offering essentially the same set of services via remarkably similar websites. Even their CEOs have the same first name: Aaron. Aaron Hirschhorn co-founded and leads DogVacay.

DogVacay says it has more than 30,000 dog sitters using its service. Rover claims more than 65,000.

With this funding round, Rover has raised nearly twice as much capital as underdog DogVacay, which has raked in $47 million from investors including OMERS Ventures, Foundation Capital, and Benchmark.

The company says its plans for the new capital include product development and expansion to new markets. It currently has 175 employees and plans to grow to around 250 in the next 12 months.

Seattle, where households with pets famously outnumbered those with human children at one point in the recent past, and where Amazon’s touts the dog-friendliness of its new employee shuttle service, has a number of innovative pet-focused businesses.

Alongside Rover, there’s Trupanion (NYSE: TRUP), a venture-backed pet insurance company that went public in 2014—14 years after it was founded. A new Seattle-based pet wellness chain called Wagly is offering an array of pet services from veterinary hospital care to training and grooming at its “Pet Campus” bricks-and-mortar stores.

Here’s a question for another post: Is the dog-loving culture of Seattle—where dogs get to use public pools (once in a while), where there was a dog in the barber shop where I was groomed last week, and where Amazon, the largest private employer, is famously pro-dog—pressuring other tech employers to offer (or grudgingly accept) dogs in the office as an employee benefit?

I talked to one startup CEO recently who has watched a small pack of dogs form in the office, in absence of any specific policy allowing them. Employees saw each other’s office dogs, and decided to get puppies of their own. There have been issues around potty training and appropriate use of conference rooms. But it also seems to have helped the company culture.

As the saying goes, you have to eat your own dogfood.

[Photo at top is news hound Samantha Romano, 1998-2014.]