Exclusive: PillPack alums pull in $20M for pet pharmacy Koala Health
In a people-to-pet pivot, PillPack alum Gavin Cotter raised $20 million in Series A funding for his latest venture, an online pet pharmacy called Koala Health, the CEO tells Axios exclusively.
Why it matters: Veterinary care is expensive and getting pricier, with pet firm MARS Veterinary estimating a 33% spike over the next 10 years. And, like human medical care, the field is reckoning with a sizable labor shortage.
🐨 Catch up quick: PillPack, a startup that catered to people with chronic conditions by delivering medications in conveniently labeled packets, rose to fame when Amazon acquired it in 2018 for $753 million.
- Koala — named after the animals' characteristic front pouches — aims to provide a similar service for pet owners.
Deal details: Menlo Ventures led the round and First Round Capital, Box Group and Operator Partners joined, bringing Koala's total funding to $23 million.
How it works: Koala's pharmacy team works with veterinarians to deliver and refill medications to pet owners, who can price-shop on the company's website.
What's next: Currently available in 36 states, the company plans to expand to all 50 states by year's end.
- It also plans to raise a Series B sometime next year, says Cotter.
- "Venture funding is key while there’s still a gap in the marketplace," he adds.
State of play: Vet care clinic roll-ups (and increasingly, virtual pet care startups) have tended to dominate investor attention. That's partly because fewer startups have focused on closing the supply chain gap between vets and pet owners. Some exceptions:
- Mars Petcare and Bain Capital Ventures-backed Vetsource helps vets source medications, OTC products and foods from manufacturers to pet parents’ doors.
- Covetrus, which CD&R and TPG recently took private in a $4 billion deal, has a products and distribution business; home pharmacy and compounding medications businesses and a tech arm aimed at boosting vet office efficiency.
- And further down the supply chain, Wedgewood Pharmacy dominates the pet compounding pharmacy arena. (Partners Group bought Wedgewood in 2021 at a roughly $700 million value.)
Meanwhile, virtual pet care remains an up-and-coming corner of the health tech sector, with venture dollars purring into startups selling everything from home care and diagnostics to telehealth and more consumer-friendly versions of classic in-person care. For example:
- Petfolk, a vet startup boasting simplified access to health records and care teams, in August clinched $40 million in Series A funding.
- The Vets, a home care pet startup, in January raised $40 million in a mammoth seed round.
- Hybrid pet care company Modern Animal last summer collected $75.5 million in a combined Series A and B round.
Yes, but: Despite a flash of recent venture deals, the pet care sector continues to be dominated by private equity players who maintain industry control, such as JAB Investors' NVA and TSG Consumer Partners' Pathway Vet Alliance.
💭 Our thought bubble: Like human caregivers, veterinarians are being pummeled with demand, so we foresee the sector continuing to bubble with M&A and investor interest from both private equity and venture players.
Sarah Pringle contributed reporting.