When Rover started seven years ago, many in the startup community snickered. There was no real business model, they said. A marketplace that matched dog owners with caretakers wouldn’t work, they said. It only got off the ground because of its well-connected venture capitalist founder, they said.
As it turns out, the naysayers barked up the wrong tree.
Rover today announced a massive $155 million funding round, propelling the Seattle-based company to near-unicorn status and making it one of the highest-valued privately-held startups in the Pacific Northwest. It’s one of the largest investments in a Washington company ever; other recent large fundraising rounds include SpaceFlight ($150 million), OfferUp ($130 million), and Remitly ($115 million), according to PitchBook data.
A majority of the round — $125 million — was led by T. Rowe Price, the publicly-owned global asset management firm that has backed companies like FlipKart, Glassdoor, Redfin, Twitter, Dropbox, and other tech giants. New investors Winslow Capital and Cross Creek participated, as did existing shareholders TCV, Greenspring Associates, and Spark Capital. Rover also closed on a $30 million credit facility from Silicon Valley Bank.
Total funding for Rover — often described as the Airbnb for pets — stands at $310 million. The fresh cash infusion comes less than a year after the company raised a $65 million round. It did not disclose a new valuation.
Easterly added that “we still have a lot to accomplish before we can declare victory by any means.”
This is the latest chapter for a company born out of a Startup Weekend event in 2011. Since those humble origins, Rover has grown rapidly, now matching more than 200,000 pet sitters throughout North America with pet owners who need help taking care of their dogs, cats, and other animals.
It nearly tripled net revenue in 2016 and 2017 and processes roughly one million bookings per month. The company, ranked #17 on the GeekWire 200 list of privately-held companies in the Pacific Northwest, did not disclose specific revenue numbers. It expects to report $375 million in total gross bookings this year; the company keeps 20 percent of each transaction.
Rover could be profitable “tomorrow,” said Easterly, who joined the company just after its creation. But it is licking its chops at the opportunity for growth, both for international expansion and entering adjacent verticals like grooming, vet services, or training in the $100 billion global pet care industry.
“We definitely didn’t need to do this fundraise at this time,” Easterly told GeekWire. “But it’s better to raise money when you don’t need it.”
Investors are making a big bet on pet-sitting marketplaces. Rover rival Wag raised a $300 million round in January from SoftBank. Easterly said he’s excited about other companies educating the market about these new services, and doesn’t consider Wag a direct competitor. Wag only operates in the U.S. and offers dog sitting and walking.
Easterly said the new round was “wildly oversubscribed,” noting that Rover could have raised as much as $225 million.
“We believe Rover can be a much larger company over time, and we look forward to working with the management team as they further innovate and grow the firm’s position in the industry,” Henry Ellenbogen, portfolio manager of T. Rowe Price New Horizons Fund, said in a statement.
Rover will use the new funding to grow operations in Europe, where it expects to launch in July with a new European headquarters. It will also ramp up social and broadcast TV advertising — “most of the world doesn’t know about Rover,” Easterly noted — and expand its dog-walking service to more markets.
Long rumored as a potential IPO candidate, Rover elected to raise capital from private investors because the company is expanding into different business segments.
“When you are making investments in new areas that are going to be unpredictable and you haven’t figured things out, it’s great to be working with investors that understand those dynamics,” Easterly said.
In regard to the $30 million credit facility, Easterly said it gives Rover more options for growth. Rover is now sitting on more than $200 million in cash.
“You don’t want to sell a portion of company you don’t have to, but at the same time, you want to give yourself some opportunistic flexibility when opportunities come along,” added Easterly, a former executive at online ad giant aQuantive.
Rover could also use its cash to make more acquisitions, though it gobbled up one of its biggest U.S. rivals, DogVacay, in March 2017.
Rover employs 375 people, including nearly 300 in Seattle, and plans to add more than 100 employees this year.
Venture capitalist Greg Gottesman, now a managing partner at Seattle-based Pioneer Square Labs, founded Rover at the Startup Weekend event. The company’s other co-founder is Phil Kimmey, who just won Young Entrepreneur of the Year honors at the GeekWire Awards.
Easterly was an entrepreneur-in-residence at Madrona Venture Group when Gottesman — then a managing director at Madrona — recruited him to lead the new startup. The company drew its fair share of criticism in the early days.
“A lot of smart people told us early on they didn’t think Rover could be a big business,” Gottesman said this week. “I think what they missed is that the market was always far bigger than kennels or other professional service providers. Rover is an easy substitute for your in-laws or a neighbor watching your beloved companion.”
Added Gottesman: “Rover has tried to make it easy and affordable for everyone to experience the unconditional love of a dog. That’s a mission worth rallying around, and we’re still just scratching the surface of the opportunity.”
Easterly said the pet industry simply hadn’t seen the same technology innovation that disrupted other consumer markets.
“Despite that relative tardiness to the party in tech and cloud and the internet, the pet industry still grows perpetually grows faster than the economy in general,” he said. “…We looked at that as an opportunity.”