Smalls bags $19M Series B to scale human-grade cat food

Smalls, a cat food startup, raised a $19 million Series B round to deliver fresh products to an under-penetrated market — cat owners.

Why it matters: Most of the focus in the pet care industry is centered on dogs, leaving the market around cats underserved and underinvested, CEO Matt Michaelson tells Axios.

Context: Roughly 47% of households own dogs while 34% of households own cats, according to Morgan Stanley research.

• Morgan Stanley projects the overall U.S. pet industry could grow from $118 billion in 2019 to $277 billion by 2030.

Details: The round was led by Companion Fund, with Left Lane Capital, Valor Capital, General Mills venture capital arm 301 INC, and Ohio State University’s endowment fund participating.

• The company raised $9 million in its Series A funding in 2020.
• It declined to give its valuation after the new capital injection.
• The direct-to-consumer brand offers ultra-high protein, human-grade cat food that is fresh and minimally processed.

By the numbers. The New York-based company has generated eight figures in sales since it launched in 2017, and Michaelson says revenue has nearly doubled every year.

What’s next: The fresh funds will be used to support the company’s growth as it enters the retail channel for the first time.

• Smalls plans to expand its headcount by about 25% and increase its product offerings to include a good assortment of tasty and healthy food.
• Smalls will also invest in another line in its kitchen so that it can make more food, Michaelson says.
• The company will focus on brand building as well, he adds, which includes TV advertising and a June subway campaign in New York City.

The intrigue: Smalls will debut a pop-up cat cafe in New York in the fall, Michaelson says.

• “We're kind of using it as a place to learn about how that would work and see if we want to go permanent."

• He views the cafe as “another channel that we add to the way that we grow the brand.”

The big picture: He sees the company growing beyond its fresh cat food roots to being a cat business more broadly, extending into categories like litter, toys, treats, furniture, and health products.

• As large CPG players find success in pet categories, they’ll invest in businesses that offer a unique asset like Smalls, Michaelson says.
• “I think the category is plenty big for there to be a public business here,” he says of his long-term road map. “But there are also … a bunch of deep-pocketed strategics, who I think there would be a lot of synergies with as well."
• After selling its dog food business, CPG conglomerate JM Smucker said its pet portfolio is focused on higher-margin businesses, which includes its Meow Mix cat food.