Pet Services Boom: Menlo Ventures Leads $12M Investment in Rover.com
Seattle-based Rover.com, which helps dog owners find someone to watch the pooch when they’re away, has raised $12 million that will back market expansion, and new services and pet types.
“So that includes cats and hamsters and gerbils and horses and guinea pigs,” quips CEO Aaron Easterly. Dog-walking, daycare, and improvements to Rover’s mobile app are also in the works, backed by this Series C round. The investment was led by Menlo Ventures with participation from existing investors Madrona Venture Group, Foundry Group, and Petco.
“At first blush, people might think this is a small market,” says Menlo principal Sunil Raman.
But Rover says the potential market, just for dogs in the U.S., is $61 billion. The key word there is potential. Currently, Easterly says, that market is only $6.5 billion a year. That’s because 90 percent of dog owners don’t use existing commercial services, which consist mainly of traditional kennels. For some dog owners who view their pets as children, a kennel is the emotional equivalent of an “orphanage,” Easterly says. “The dog is wondering what they did wrong and you hate yourself.”
Half of the company’s pet owners come from that large group that wasn’t previously using a commercial boarding service, relying instead on friends, family, and neighbors. “The big opportunity we see in this business is growing the category,” he says.
To that end, a lot of the latest investment will go toward marketing to gain new customers, as well as technology improvements, and hiring, Easterly says. The company has 43 employees, most of whom own dogs. (It’s such a pet-friendly workplace that Rover will pay for its new hires who don’t have dogs to adopt.)
Rover matches pet owners with pet sitters in their area, using obvious criteria such as date of stay, location (in the pet owner’s home or the sitter’s), and dog size. Owners can select a sitter based on price and reviews—95 percent of which are five-stars. “We actually worked really hard to bring that number down,” Easterly says, so that users could more easily differentiate between top sitters.
Owners can leave detailed instructions for the sitter online, and get the peace of mind of customized care, pet insurance, on-call veterinary consultation (for the sitters), and photos and videos of their pet while they’re away.
In addition to sitter listings and search, which are free, Rover handles billing and payments. It makes its money by taking 15 percent of each paid transaction. Revenue has grown 800 percent in the last year, Easterly says, though he declined to offer an absolute number. “Right now, we’re focused on cost-effective growth, not short-term profitability,” he adds.
Easterly says that despite accepting only 12 to 14 percent of dog sitters that apply, Rover has more than 25,000 sitters registered on its service. That, he says, helps distance Rover from its online competitors.
Sitters set their own hours and rates, and approach dog sitting as everything from a hobby to a profession, so earnings vary considerably. Rover boasts that its top sitters are earning $7,000 a month, and Easterly says he expects some sitters to earn six figures in 2014.
Menlo’s Raman and Venky Ganesan are joining the Rover board of directors.