It may surprise you to know Mars Inc., the maker of beloved candy bars, was hit in 2017 with an antitrust warning from the Federal Trade Commission requiring the company to divest some assets before acquiring a new company.
But the FTC’s warning didn’t stem from Mars’ candy empire, which includes Snickers, M&M’s, Altoids, Life Savers and Skittles. Mars owned too many veterinary clinics, the FTC said, and was mandated to divest 12 of them in order to complete its $9.1 billion acquisition of VCA animal hospitals.
In fact, the candy conglomerate is the world’s largest pet food manufacturing company and has been steadily investing in dozens of pet tech startups in recent years, per Crunchbase data.
“Mars Petcare actually is very much growing and is one of the biggest parts of Mars corporate,” said Audrey Yoo, vice president of innovation at Mars Petcare.
The company, which owns more than 2,500 veterinary hospitals, began taking a greater role in the pet care startup space in 2018.
It’s a good time to be a pet care giant. Global funding for pet tech jumped 156% between 2020 and 2021 to $1.7 billion, Crunchbase data shows. The next year wasn’t too far behind — while venture funding declined in almost every other sector in 2022, pet toy and health investment saw its second-best year ever.
Mars’ pet history
Mars spent much of the late 1800s and early 1900s making chewing gum and chocolate. It wasn’t until 1935 that Mars acquired a canned dog food company, and then, a couple years later, began manufacturing cat food. In 1965, Mars established the Waltham Petcare Science Institute to study the nutritional needs of dogs and cats.
Thus began decades of collecting food brands, developing diagnostic kits and acquiring veterinary facilities. In Mars Petcare’s arsenal are 11 veterinary and diagnostic companies, 30 food labels, and nine research and health institutions.
“The pet space was totally void of a good venture capital foundation,” said Brett Yates, CEO of Michelson Found Animals. “Great ideas were just dying off because there just wasn’t enough money flowing into them. So there was no support for the whole system.”
Mars also set up a $100 million fund the same year called Companion Fund, which is the second-most active investor in pet care, according to Crunchbase data.
Together, Companion Fund and Leap Venture Studio have made 21 investments since 2018, to the tune of over $92 million in venture funding. They have around 50 companies in their combined portfolio.
Updating pet tech
Confined to their homes and working remotely long-term for perhaps the first time, 1 in 5 Americans decided to bring a new four-legged family member into their lives, according to the American Society for the Prevention of Cruelty to Animals.
One of the biggest drivers of opportunity in the space was changing demographics — digitally savvy millennials were grappling with an antiquated veterinary system. Meanwhile, pandemic-era changes to human health care came with accessible telehealth services and online scheduling platforms.
“We saw a shift in pet ownership,” Yoo said. “There’s a whole new generation of digital native millennials who are very familiar with different service concepts, and the pet parenting journey is not quite there yet. So we saw an opportunity.”
Investments from Leap and Companion span the world of pet nutrition, telehealth and support for new pet parents. PetPlate, for example, offers human-grade meal kits for dogs made with meat, potatoes, apples and other whole foods. MySimplePetLab creates mail-in diagnostic kits that test for ear infections, or routine stool sample tests. Scout Bio uses gene therapies to create new medicines for animals.
Much of the innovation in pet care comes from the advancements made in human health care. Wearable biometric trackers similar to the Apple Watch or glucose monitors could be tools to track the long-term health of animals that can’t tell their owners when something is wrong. At-home diagnostics kits similar to our COVID-19 tests and meal kits are also becoming more popular for pets.
“I think there are a lot of similarities with human health and pet health where we can learn from each other,” Yates said. “There are some things that we’re able to do with pets that aren’t generally accepted with humans — like wearing a collar — to see exactly what’s going on with your pet.”
Source : https://news.crunchbase.com/agtech-foodtech/pet-food-tech-vc-investment-mars/