Are pet trackers the next hot healthtech sector?

Pet trackers are small connected devices that can be put on a dog or cat’s collar, either to help find a lost pet, or to track its overall health and activity levels.

Such devices featured heavily in Christmas gift lists this year, popular with many people who had adopted a pet during lockdown restrictions.

But the category is still fairly nascent — there are no giant-sized market leaders and most companies are bootstrapped or funded only by small angel rounds.

Is this about to change? Is this sector on the cusp of taking off, with potential to transform veterinary medicine and pet insurance?

Sifted hosted a webinar to look at the prospects of the market. This is what we learned:

It is hard to build hardware — and even harder if you are creating a new category
Tractive, an Austrian startup, was one of the pioneers in making devices for pets starting back in 2012. Eight years later it has built up a respectable presence, with 350k paying subscribers a month and more than 500k devices sold.

It has taken a lot of iterations to find the right model, Michael Hurnaus, Tractive’s founder, told Sifted. The company initially toyed with an activity monitor like a Fitbit for animals but abandoned this after two years after finding that people lost interest in it fairly quickly. Now Tractive focuses on GPS location trackers.

“People would use [the activity monitor] for four weeks, five weeks, six weeks, they might charge it up once or twice, and then didn’t want to see the same data again, similar to what I feel when I wear my Fitbit,” said Hurnaus.

A GPS tracker, on the other hand, was a safety device that people were more likely to persevere with for the long term. If it can include elements of activity tracking, all the better, but people need that core reason to pay a monthly fee for using the service.

“Where we see the opportunities is in bringing all those pieces together — insurance and medical, and also the food side, knowing how much to feed your dog.”

PitPat, a UK-based tracker startup has opted to go down the activity tracker route — the monitoring device has a short-distance bluetooth connection to the pet owner’s smartphone — but is hoping to keep its users interested by making PitPat the platform for a lot of services that dog owners might need.

“Where we see the opportunities is in bringing all those pieces together — insurance and medical, and also the food side, knowing how much to feed your dog,” says Verity Batchelder, non-executive director of PitPat. “PitPat can be the centre of that information and it can feed all the services that you need.” The company recently partnered with FirstVet to give its monthly subscriber PitPat Life customers access to video calls with veterinarians.

Heidi Elomaa, who is a veterinarian as well as a project manager at If Pet Insurance, based in Finland, said she is still worried that the pet tracker market might remain limited.

“I think the people that buy these things are anyway taking good care of their pets, it is more the question of how to get these trackers to people who are not as well acquainted with the things they should follow,” she said.

Hurnaus agreed that strong Christmas sales notwithstanding, pet trackers still have a battle in making people aware of the product. “Awareness that this kind of product exists is still extremely low. In our biggest market, Germany, nine out of 10 dog owners don’t even know this category exists,” he told Sifted.

PitPat’s Batchelder is hopeful, however, that awareness can grow quite quickly. “There are ways of structuring partnerships so that the next tranche of people who aren’t in the top most active 15% of dog owners, you could use the incentive of a cheaper insurance, for example, to get them to be more active,” she said.

Investors have been very wary of backing pet hardware companies
“There is a hierarchy of what investors are interested in in consumer hardware and pet tech is probably right at the bottom,” said Cyril Ebersweiler, general partner at SOSV, the hardware-focused venture capital company. Ebersweiler was an early investor in Petcube, the pet monitoring camera company, and knows a lot of the headaches of scaling pet tech hardware.

“There is a hierarchy of what investors are interested in  and pet tech is probably right at the bottom.”

Eberswiler says VCs are mainly interested in backing businesses that have recurring fees for services. “You can have $10m, $20m, $30m businesses, where you are selling items one by one and you won’t get funded by VCs.”

Pet trackers have had to figure out how to build monthly subscription offerings — PitPat and Tractive both do this — in order to become investable.

VCs have also been sceptical about the size of the opportunity. “There are hundreds of software businesses with potential to scale to $100bn dollar businesses so investors are likely to look at those first,” says Ebersweiler. “Why wouldn’t investors invest in those companies instead of going through the (hardware) grind?”

The devices themselves still need some development
Recently, the market for human wearables has stalled somewhat as the devices proved to not be quite sensitive enough to pick up medical grade data. That made it hard to use these for anything other than hobbyist personal monitoring, and we await the next iteration of better devices.

The same thing applies for animal wearables. Elomaa said she had yet to see any medical-grade wearables for pets.

“There isn’t any good, accurate, non-invasive way of measuring the blood pressure of a dog.”

“There isn’t any good, accurate, non-invasive way of measuring the blood pressure of a dog,” she says. “And even if there was, there aren’t any reference values for all the different breeds.”

But Hurnaus and Batchelder argue that trackers can have medical impact in other, more low-key ways. Sure, they are not going to give the vet an accurate reading of your pet’s vital signs, but they can be used by pet owners to indicate when there might be something wrong. If your dog moves less than usual, or has more interrupted sleep, these could be a sign of pain.

“We aren’t going to tell you your dog has osteoarthritis, but we can suggest that something has changed and it might be a good time to visit the vet,” says Hurnaus.

“Adherence to a weight-loss programme is higher if you have a tracker.”

Batchelder says the PitPat tracker can also be used to monitor if a certain medical intervention is working — for example by showing whether your dog becomes more active afterwards.

They can also be a useful tool in helping tackle the epidemic of pet obesity (more than 50% of UK dogs are overweight). “If your dog has been encouraged to attend a weight-loss clinic, we have found that adherence to the programme is higher if you have a tracker,” she said.

Why the pet tech market might be about to take off
The insurance companies are eyeing up collaboration. Despite her scepticism about the precision of current trackers, Elomaa says is interested in adding these to its customer offering.

The company surveyed 700-800 dog owners in Finland three years ago in a big Tech for Dogs study and trackers emerged as a top item that dog owners were interested in.

“I am very keen to have this kind of technology as the next one for our insurance company’s customers.”

If Insurance already has a partnership with FirstVet to offer video calls with veterinarians, and wearables could be one of the next features to add to its offer.

“I am very keen to have this kind of technology as the next one for our insurance company’s customers,” Elomaa said.

She is particularly interested in the data that the insurance company could gather on pets this way — it could start to compile some of those comparative figures about how active different dog breeds are, for example. Insurance customers could be offered small discounts if they were to use a tracker and share the data from it.

Medical companies too, are likely to be interested in the data, says Hurnaus. “There is a huge opportunity to create medical data for the pet world. The big pharma companies need this data but they don’t want to build their own devices in-house.”

For the investors, the market is also starting to look like it could be big enough. Ebersweiler estimates that the wearables market is worth around $1.6bn and the overall pet tech market is worth some $5.4bn growing to $30bn in 2027.

What is still missing is a pet tracker trailblazer.

“You need a trailblazer showing investors that you can build a billion-dollar business, that’s what VCs are interested in,” said Ebersweiler. Still, he muses, explosive growth can come almost out of nowhere. Until recently, he said, sports hardware startups were as poorly rated as pet tech hardware.

“But then — boom — you have Peloton,” he says. Hardware fortunes change quickly — it’s worth keeping your eyes open on this one.

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