The pet sector is booming but investors must make sure the sector develops in a way that reflects the diversity of pet owners.
The pet care industry has seen tremendous growth recently. While most are aware of the major influence the pandemic had on increasing levels of pet ownership, the rise of the middle class in many emerging markets coupled with pets more and more becoming seen as family members has also played a part in the growth of the global pet care industry.
This increased interest in pet care has led to exciting innovations that may even revolutionise how we keep our pets healthy. But challenges remain in ensuring pet care innovation can be as diverse as the increasing number of pet owners. Currently, just under 10% of pet care businesses are owned by people from minority backgrounds, creating opportunities in pet innovation to help build the sector to be more inclusive and representative of the communities, pet parents and pets it serves is critical.
In order to achieve such representation we need to especially focus on the “E” in DE&I. Equity can be defined as equal access to the same opportunities and resources. Unfortunately, this access (particularly in the investor and start-up space) has been historically concentrated in small pockets of the population. As investors, we must commit ourselves to bringing greater equity to the industry, making the world a better place for pets, pet parents, and all the people who care for them along the way. We can achieve this by focusing on three main areas: technological innovation, collaboration with on-the-ground professionals, and VC funding.
Looking beyond Silicon Valley for innovation
Silicon Valley has historically been the place to look for promising startups, and even last year it still ranked first in terms of venture-capital investments and the number of deals. However, we’re gradually watching attention shift away from Silicon Valley, with places like Miami, Austin, New York, and Seattle reporting increasingly more funding and deals.
Because pet tech covers such a wide range of use cases, and so many pet parent needs are unique to their cultural context, it also follows that many startups meeting those specific needs will emerge from as many different locations. While Silicon Valley may be the best place to be for a B2B SaaS startup, Austin may give rise to more startups focused on producing organic pet food from locally sourced produce, for example. So seeking companies outside of Silicon Valley, and even outside the United States, is advantageous. Every investor wants to have a head start on the next big success story, and yet the majority remain single-minded in where we seek out promising founders.
As we work to promote equity by looking outside Silicon Valley, we may need to expand our personal networks. Looking to trusted connections to point you in the right direction is far easier and usually more successful than trying to Google your way to an innovative startup.
Additionally, looking to hybrid options or fully online programs like pitching competitions, accelerator programs, or workshops allows for a greater number of participants from places all over the world. If, however, you prefer to meet potential portfolio companies in person (which is understandable), choosing locations that are more affordable and easily accessible is also a relatively easy way to open the door of opportunity to someone who may not have had it before.
VC investors know the kind of incredible technology and innovation that’s happening right now, so why have we not been more creative in the way we seek out that kind of transformational potential?
Creating more collaboration with industry professionals
While the pet care boom has for a long time excited industry veterans, the business opportunities opened up by this space have also brought newcomers. This has led to a shift in the type of founders we have seen through our accelerator program Leap Venture Studio.
In the past, founders tended to be passionate pet parents with good ideas or veterinarians ready to change the field, but now we’re seeing more pet tech founders with entrepreneurial backgrounds. This comes with many benefits, but we also want to ensure we don’t reinforce the silos that currently exist in the worlds of startups and venture capital.
The groomers, veterinarians, veterinary technicians, dog walkers, and everyday pet parents likely have innovative ideas of their own and should be playing a key role in the development of the future of pet care. So once again, we’ve got to work on ensuring their voices are heard to really prioritize equity.
One way we can bridge the gap is encouraging more collaboration with on-the-ground pet care providers. For one, learning about their pain points could direct investors toward the type of innovation that the market needs. Moreover, there is no better group to test products in the real world than those who are passionate, up-to-date on the realities of the industry, have their own networks, and are willing to try new things. It’s an ideal combination for finding product testers and future ambassadors.
More importantly, however, it may also inspire more would-be-founders to put their own innovative ideas into action, as they can ‘peek behind the startup curtain’.
Another option for breaking down silos between these seemingly disparate worlds, is to encourage pet care startups to follow the lead of healthtech startups who often employ a Chief Medical Officer to ensure they have needed expertise on their team. Pet health startups could hire Chief Veterinary Officers or work closely with qualified veterinary advisors.
Making a better world for pets means taking active steps to foster collaboration and community between the worlds of startups and passionate pet care professionals.
Breaking the VC mould for funding and investors
As a Korean woman, when I first started my career working in multinational corporations, there were many times that I felt myself as “the other” in the room. Thankfully, over the years that feeling of difference has lessened due to more diverse representation across employees and leadership teams. Unfortunately, when it comes to my work as an investor, there are still times when there are few others in the room that look like me.
The world of venture capital is still severely lacking in diversity, which has led to massive imbalances in who receives funding. The fact that less than 2% of VC funding goes to female founders has been static for far too long. Less than a third of startups report having at least one female founder, and on average just 15% of startup founders are female.
When we look at funding through the lens of race or ethnicity, things get even more disappointing. Funding in general was difficult across the board in 2022, but black startup founders were hit harder than most. Black startups received only 1.1% of funding last year, this was also down from 1.5% in 2021.
To create more equity in the pet tech industry, not only do investors need to be more conscientious about who we’re funding, but we need to see more diversity amongst the investors themselves. If we can better support underrepresented founders who have successfully fundraised and grown their companies, this can lead to more exits. Ideally, those founders turn around and invest more in other non-traditional founders.
When you think about diversity (or the lack thereof) in the investor community, it can feel like an impossible task to actually make meaningful changes. However, the more we continue these conversations, make concerted efforts towards change, and continue to strengthen diverse communities, we can eventually reach a tipping point where change happens rapidly.
Today, it feels preposterous to me that just 50 years ago women couldn’t open a credit card in their own name. I hope one day my daughters look back at this piece of writing and think the current lack of representation is equally preposterous. Let’s use our power as investors to make that a reality, sooner rather than later.
Audrey Yoo, VP of Business Innovation at Mars Petcare and Mentor for Leap Venture Studio – a partnership between Mars Petcare, Michelson Found Animals and R/GA Ventures.