We’ve all seen the headlines, noticed the trend, or engaged in it ourselves: The pandemic bred a pet boom. As the sector skyrockets and the pet telemedicine regulatory landscape changes rapidly—following the rapid expansion of human telemedicine—we are excited to announce Forerunner’s entry to the space with an investment in Dutch, the go-to destination for pet health.
The Pet Boom
The pet market was wildly attractive even before the pandemic, with 75% of US households owning pets (1/2 owning at least one dog and over 1/3 owning at least one cat), which is up 20% in the last 30 years). Then COVID-19 hit, priorities shifted homeward and a record ~23M U.S. households acquired pets. Notably, Millennials and Gen Zers are acquiring pets at higher rates than older generations.
The sector reached $100B+ for the first time in 2020, not only as the number of pets ballooned, but also as pet parents continued to spend more per pet. Thirty percent of pet parents spent more last year than in 2019. Underpinning and further driving growth is the ‘humanization of pets’ trend, which has been gaining steam for years as pets are viewed and treated more and more like family members. (Our early belief in this cultural shift led us to invest in The Farmer’s Dog back in 2015).
Veterinary Care Bottlenecks
With the boom in pets, a boom in the need for medical care naturally followed. But vets were already struggling to meet pet care demand pre-pandemic, and 2020’s record pet acquisitions drove lead times for veterinary care through the roof. The average wait time to see a vet doubled in 2020.
Even when a vet is available, pet owners can be reluctant to bring their pets in for care. Many don’t want to stress their pets with an in-person visit—the sight of the carrier alone followed by the car/subway/bicycle rides to the dreaded clinic can make matters worse for pets with anxious tendencies. Many others don’t want to bear the cost for non-crisis moments, preferring to wait to bring their pet until they absolutely must.
From the wait times, to pets’ poor experience, to the high price tags, many pet parents just avoid the visit altogether—and the deferral of care certainly doesn’t improve health outcomes.
The Pet Telemedicine Landscape
Sadly for pet parents, pet telemedicine maturation has trailed human telemedicine considerably, with leaders like Teladoc ($TDOC, $24B market cap post Livongo merger), Hims & Hers ($HIMS, $2B market cap), Lyra (privately valued at $5B), and Roman Health (privately valued at $5B) yet to see pet counterparts of comparable scale. For years, parents’ options were limited largely to dragging their pets, clawing and yelping, to in-person visits.
The nascent pet telemedicine industry was also checked heavily by regulatory limitations. But, as with human telemedicine, restrictions fell precipitously as the pandemic challenged safety and access to in-person care. The FDA removed the need for in-person exams, and many practices and startups took the moment to adopt or expand virtual offerings.
There’s still a ways to go to ensure that pet telemedicine can be practiced nationwide without a pre-established VCPR relationship, but we have reason to believe the industry will evolve in favor of expanded access to care—and that pet parents, having realized for themselves how much can be accomplished via telemedicine, will increasingly attach to virtual care offerings.
With the pet sector thriving, pet health mirroring the in-progress digital transformation of the human health sector, and pet parents increasingly sold on the merits and ease of telemedicine post-pandemic, there’s never been a better time to invest in problem solvers in the category.
Dutch
Dutch just launched its platform for virtual, vet-prescribed treatment plans for pets’ underserved conditions, delivered to their doggie doors. With Dutch, pet parents now have a more immediate means of treating their pets’ chronic conditions that are often left untreated until a veterinary visit is required for more acute issues. Just as Hims & Hers created the 'digital front door' for self-pay consumer healthcare, we see an opportunity to build the go-to pet health/wellness destination with a similar offering.
Dutch will initially address chronic veterinary issues like pet anxiety and dermatology/allergies, adding treatment for more ailments over time. These conditions significantly impact pets’ wellbeing. Take dogs: Roughly 75% of dogs exhibit at least one anxiety-related behavior (with instances likely to jump as owners return to offices and restart other out-of-home rhythms), and 15% of dog-owning households have dogs with skin disorders or allergies (Scientific Reports, 2020; AVMA, 2020). Both are underserved due to the logistical challenges highlighted above, and because many pet parents don’t realize there are safe, effective medications out there to improve pets’ quality of life.
The company was founded by Joe Spector, dog dad and one of the co-founders of Hims. As we observed as early Hims investors, Joe was instrumental in establishing the company’s national telemedicine and doctor network, setting up the initial pharmacy supply chain, and launching retail partnerships—balancing precision and clinical integrity with warp speed in all efforts. A magnet for talent, Joe has surrounded himself with the team to win, including world-class veterinary specialists and founding team members spanning the telemedicine and consumer industries, from Roman, to Reformation, to Mattel.
There’s no better time, and no better team, to consumerize veterinary care through telemedicine, and we couldn’t be prouder to play a role in expanding access to happier, healthier pets.
See what we're so excited about; check out dutch.com, or connect with Dutch on Facebook, Twitter, Instagram, LinkedIn and YouTube.