It’s probably not the most significant development in the world of finance during recent weeks, but it may prove the beginning of a notable trend nonetheless: The past month has brought a flurry (or should we say furry?) of private equity and venture capital deals involving companies related to dogs.
The latest example continues L Catterton’s ongoing efforts to consolidate in the consumer space, as the firm has made “a significant growth investment” in JustFoodForDogs, a provider of small-batch, home-cooked pet food that was founded in 2010 and operates primarily in Southern California. The deal comes just a few weeks after another L Catterton growth deal in the space, when the firm collared “I and love and you,” a supplier of premium pet food.
And the Connecticut-based investor is far from alone—a whole pack of investors are pursuing purchases involving pups. The most notable may have occurred in mid-April, when PE-backed PetSmart agreed to acquire Chewy, an online retailer of pet food and other animal products, for a reported $3.35 billion—among the largest deals ever involving a VC-backed ecommerce business. PetSmart was acquired by BC Partners and other co-investors for $8.7 billion in 2015.
At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More
Around the same time, another pet-food add-on occurred with the purchase of Arthur Dogswell by Whitebridge Pet Brands, a portfolio company of Frontenac since 2014. TSG Consumer Partners was Dogswell’s previous PE owner.
The venture space, meanwhile, brought a significant deal of its own in the last week of March. That’s when Rover.com acquired DogVacay in a merger of two pet-sitting businesses that have snapped up nearly $150 million in combined venture funding, with Rover reaching a $300 million valuation in its latest round. The merged company will be based in Seattle and offer a network of more than 100,000 pet-sitters in the US and Canada.
Overall, though, global private equity activity in the consumer products sector is on the decline, according to the PitchBook Platform. After deal count stayed at a steady high throughout 2015—ranging between 775 and 800 on a quarterly basis—the rate of investment has undergone a continual decline, reaching a current nadir of 465 transactions last quarter, according to PitchBook data. While that figure is likely to rise in the coming months due to a lag in reporting, it will likely still represent a significant drop.
And that decline is part of the reason the B2C space has fallen behind IT when it comes to private equity investment—a phenomenon about which you can read more right here.
Article by Kevin Dowd – PitchBook