Rover, the Airbnb of dog sitting, has raised a $3.5 million funding round led by Petco. The pet specialty giant, now one of Rover’s largest investors, will be joining the site’s board of directors. The two are at work on commercial promotion of Rover across Petco’s lines of business.
Rover CEO Aaron Easterly told us that this fundraising is more of an ancillary round than an official series. The important thing, he said, is the strategic relationship with a leading pet supplies retailer.
“When we were in our early stages we talked with people at Petco. We thought we had very similar philosophies on how the pet business was evolving,” Easterly said. “We had similar values, so we agreed to stay in touch. We rekindled that conversation after our Series B, as we were a little more mature and had a lot of growth to point to.”
Easterly said that the site’s biggest growth challenge and greatest opportunity is the 90 percent of dog owners that do not use commercial solutions for housing their dogs while they are away. Easterly derived this stat by looking at the existing market size in the American Pet Products Association National Pet Owner’s Survey and comparing it to an estimate of how big the market would be if all dog owners used a commercial service when they traveled. This is calculated by using Census data on households, the National Pet Owner’s Survey, and U.S. Travel Association.
Most of this 90 percent of people don’t even think to look for a service like Rover, Easterly said, and instead turn to family and friends for dog sitting. It’s a visibility problem that Rover has thus far sought to rectify with mass-media campaigns in TV and radio, and that promotion by Petco could go a long way in alleviating.
Although Rover faces competition from similar sites like DogVacay, Easterly said that their true competitors are those family and friend dog sitters.
Rover’s 150,000-person member base is relatively broad, but it does skew older than one might expect of a startup: Their biggest single demographic group is women aged 35-45. This is the group that sees itself as pet parents rather than pet owners and cares about whether their dog gets to sleep in a bed, Easterly said. These owners may be more likely to spend extra money on their pets, but at an average price of $30 a night, Rover is within most dog owners’ means.
This is Petco’s first investment in an early-stage, offline company, Petco VP of Business Development Ted Root tells us. Working with Rover is an opportunity to grow the service side of their offerings, which already includes in-store grooming and vaccinations.
“We believe that there’s rapid growth opportunity in certain slices of the service segment in the pet specialty arena,” Root says. “There are lots of mature services like grooming and things along those lines but boarding is highly fragmented… We see the opportunity to take advantage of a formalization of this super fragmented market where people have leaned on friends and family for a long time.”
Rover specifically complements Petco’s Pooch Hotels, daycare and boarding locations where dogs can play with each other. Dog owners want variety in their overnight options, and Rover is helping Petco deliver that. The involvement with Rover also provides another online growth avenue to Petco, which is strong in its brick-and-mortar presence.
The commercial evidence of the Petco partnership will become visible in the next few months, Easterly says, although he did not provide specifics on what that will look like beyond Petco offering Rover’s services to its customers.
Although Petco will be its main focus in the coming months, Rover also plans to release its Android app soon, as it is currently only available for iPhone. The mobile apps are primarily focused on keeping pet owners in contact with their pooches while they are away, through photo sharing and text communication.
Rover raised $7 million in Series B funding led by Foundry Group last February after closing a $3.4 million round led by Madrona Venture Group in April 2012.
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