By: Jacky Abitbol and Costanza Carissimo, Cathay Innovation
One unexpected trend that has come out of the global COVID-19 pandemic — a historic boom in pet sales like the world has never seen. Since stay-at-home orders, pet adoptions have skyrocketed, leaving many animal shelters and pet stores empty for the first time in years. In fact, according to The Financial Times, this pet frenzy has even led regions like The United Kingdom to have its first “puppy shortage” as the demand for lockdown companions continues to reach new heights.
But in today’s world – now facing a second wave of lockdowns – that prioritizes remote and digital first interactions, how are pet owners providing adequate care for the newest members of their families? At Cathay Innovation, we’ve long believed in the digitization of healthcare from drug development (investing in companies such as Owkin and Savana), to staffing (e.g., our investment in Germany’s Medwing), to health insurance (e.g., our investment in US-based Sidecar Health). And just as the pandemic has been a catalyst for the rapid rise of telemedicine for humans, so too will we see a rise in pet telemedicine — a largely untapped opportunity.
With this in mind, we are thrilled to announce our investment in Sweden’s FirstVet: the world’s leading digital veterinary clinic. Representing our first investment in the Nordic region, Cathay Innovation is joining lead investor Mubadala Capital and existing backers in supporting FirsVet’s $35M financing round. As the company continues to expand internationally, officially launching in the United States, we look forward to working with the FirstVet team to scale their innovative services and bring greater peace of mind to pet owners around the world.
”For us at FirstVet each investor is a new partner, so the most important factor is always the people. We’ve been impressed by Cathay Innovation’s professionalism, commitment and know-how. On top of that, Cathay’s market reach, both industrial and geographical, has great strategic value for our continued roll-out.” Per Victor, Co-founder, FirstVet
Pet Telemedicine: A Growing Market Opportunity
Pet care represents a large, recession-proof market, estimated to be around $190B today. It’s also expected to see sustained growth over the long term, with some reports predicting the global pet care market to reach $359B by 2027, with increasing consumer awareness, the humanization of pets and rising disposable income of pet owners driving higher spend per pet. Within this context, pet insurance, key to FirstVet’s strategy, is seeing increased penetration across most markets while the pandemic has accelerated an ongoing trend of higher usage of telemedicine services.
Yet, despite the market size and related expenditure worldwide, pet telemedicine remains a nascent industry. Many pet owners today are faced with an upward battle, confronted with an outdated system that often falls short in providing animals – and their owners – the proper care they need. In addition to the high costs, and at times traumatizing pet experiences, associated with a physical trip to the neighborhood veterinarian, pet owners often only notice warning signs or health indicators late at night or during the weekend when traditional vet clinics are closed. As more people welcome new pets into their homes, the demand for better access, efficient and reliable pet care will only continue to rise with new lockdowns and stay-at-home restrictions contributing to an already challenging environment.
Historically, the regulatory framework for pet telemedicine has been slow to progress compared to human telemedicine, with some arguing that the digital experience would be less effective for animals who are incapable of describing symptoms. But this sentiment is rapidly changing, partially driven by the pandemic. Various players in the pet care ecosystem are finally beginning to realize that a more digitized, modern approach can be a tremendous tool for pet owners, animals and veterinarians alike.
Enter FirstVet: A New, Important Link in The Pet Care Ecosystem
FirstVet is modernizing pet care by providing pet owners with state-of-the-art on-demand video consultations from local, qualified veterinarians — enabling a more cost- and time-efficient service. While physical clinics and other first-generation digital players have attempted to offer similar services, most do not have the necessary tech-DNA to set up and scale these solutions on their own.
As an intermediary, FirstVet is providing convenience for pet parents, cost improvement for insurers, and efficiency gains for vets. The company offers 24/7 online consultations, with very limited wait times (~30 minutes), for expert vet advice and diagnoses for a variety of different animals, ranging from cats and dogs to horses and reptiles, all from their mobile devices. They’ve also demonstrated that up to 70% of all video consultations do not require an additional physical visit, saving significant time, stress and money for all parties.
Insurance companies in particular play a key role. With the rapid increase in pet insurance penetration, insurers want to offer a high-quality 3rd party telemedicine service to pet parents not only as a perk to clients but also as an effective cost saving tool. By partnering with over 40 insurance companies, the FirstVet platform is currently available to over 7 million pets and pet owners today.
The company continues to build on significant traction, recording 150% year-on-year growth since July 2019, with more than 380,000 active users and helping facilitate the diagnosis of over 220,000 pets. There are currently 250 highly qualified veterinarians on the platform and rising. FirstVet has already demonstrated the ability to drive a successful international business, having established operations in six key markets, including the Nordics, Germany, the United Kingdom, and with the new financing, now the United States.
Notably, since FirstVet owns the relationship between the pet parent and the vet, they represent an important link in the pet care ecosystem. This positions them well to respond to the needs of various stakeholders to build future products and services on top of video consultations.
Parting Thoughts — An Emerging Global Leader; An Impactful Service
FirstVet was established in Stockholm in 2016 by a world class founding team which had previously founded and exited one of Sweden’s leading online pet supply retailers, Vetzoo. During the investment process, we have been continuously impressed by Co-founders David Prien and Per Victor, and the entire FirstVet team’s execution ability and experience in the pet care market.
FirstVet’s unique model provides value to all stakeholders – from pet parents, vets and insurance companies – demonstrated by its rapid growth, stellar Net Promoter Scores (NPS) from vets and pet parents, and glowing references from insurance partners. This gives FirstVet the first mover advantage, emerging as the most promising pioneer in the industry with the potential to become the global leader.
At Cathay, we are confident in FirstVet’s ability to lead the market but more importantly, we see their potential to scale a highly impactful digital-first service that has the power to fundamentally alter the way we approach pet care for decades to come. As a global investor, we look forward to doing our part in helping FirstVet bring their tech-enabled services to more animals and pet parents around the world. While FirstVet may represent our first investment in the Nordics, it certainly won’t be our last and we greatly look forward to working with more and more innovative founders and companies across the region.