SoftBank & Pandemic Pets 🐶
The Pet Boom 💥
It’s been a difficult year globally with lockdowns and working from home, but the one perk of the pandemic is that it’s the perfect time to get a pet… so much so, worldwide pet adoption searches hit a 5 year high in April 2020 (based on Google Trends Data).
The biggest winner in all this is the Pet Care Industry, which is growing at a CAGR of 6.1% (compound annual growth rate) and could eclipse $350B by 2027.
In 2020, 68% of US households have a pet (up from 56% in 1988) - but what’s most interesting is that the majority of pet owners are now digitally inclined Millennials 🤳
Your Dog, Decoded 🧪
On July 26, 2021: SoftBank led a $75M funding round in Embark. At a $700M Valuation, this Dog DNA Startup is the biggest Pet Startup Series B ever.
Founded by geneticists and brothers (Ryan and Adam Boyko), Embark want to “give pet owners tools to create the best future for their dogs”… and it’s working, revenue grew 235% YoY (on track for ~$100M this year).
Here’s their approach:
✅ Data First: Embark has the world’s largest canine database with ~1M dogs
✅ Digital First: From DNA Kits to results, everything can be done online
✅ Affordable: Get insights into your dog’s breed and health for $199
✅ Actionable: Clients have lengthened their dogs’ lives by avoiding certain drugs, altering diets or making other changes based on Embark’s data
The Masa Mindset 🎰
For those unfamiliar with Masa Son, he’s Japan’s richest man and oversees a Telecom / Investment empire via SoftBank (where he operates on a 300-year plan).
His bold ambitions have resulted in Vision Fund #1 ($100B) & Vision Fund #2 ($30B) where he deploys huge amounts of capital and makes outsized bets on the future. His vision famously helped him convince the Saudi Crown Prince to invest $45 Billion in 45 minutes… that’s $1 Billion a minute:
His investing style in Vision Fund #1 had a few patterns:
Identify Emerging Trends that could create unicorns and 1,000x returns.
Own the Trend: It’s easier to predict which category, than which company. SoftBank doesn’t shy away from investing in multiple companies in a category.
Money Moats: Offer generous funding, with the assumption that the best-funded startup can outspend competitors and win in the end.
This approach paid off on Uber (SoftBank backed every major ride-sharing company), but not on WeWork (their $18.5B investment, is currently valued at $2.9B). And so for Vision Fund #2, SoftBank is prioritizing more diversification, but owning emerging trends stays core to their strategy.
Zoom Out 💡
SoftBank is betting on two massive converging trends:
Pet Care will continue to grow 📈
Personalization matters 🔮
As Lydia Jett (Founding Partner at SoftBank’s Vision Fund) explains:
“Embark is very much aligned with what we are seeing across our portfolio that consumers are revisiting priorities and choices. That is a major trend, but still early in the cycle of personalization for their pets.”
Simply put, the future of commerce is not mass produced and standardized products. So in the realm of pet care, a possible evolution for Embark is to expand into the adjacent categories where pet owners spend the most and offer them personalization.
Imagine a world where based on your dogs DNA, they get a customized pet food and vet care to ensure they live a long and healthy life.
