From hackathon to IPO: Pet sitting marketplace Rover is Seattle’s newest public company

The Nasdaq went to the dogs during the opening bell on Monday as Seattle-based Rover began trading as ROVR. Amber Christensen, Rover’s longest tenured employee outside of the founders, was joined by pups from left, Chico, Olive and Roxie. (Rover Photo)

It started as a simple pitch at a Seattle hackathon for a marketplace to facilitate matches between pet owners and sitters.

Now, a decade later, Rover is a publicly traded enterprise.

The Seattle-based company will begin trading on the Nasdaq Monday under the ticker ROVR, following its merger with Nebula Caravel Acquisition Corp, a publicly-traded SPAC sponsored by True Wind Capital.

The SPAC deal valued Rover at $1.35 billion when it was announced in February. It will inject approximately $240 million into a business that was hitting hard when the pandemic began, but has rebounded thanks in part to rising pet adoption rates and increased spending on pets.

Rover CEO Aaron Easterly. (Rover Photo)

GeekWire was the first media organization to cover Rover, which was sparked by an idea from Seattle venture capitalist Greg Gottesman at a Startup Weekend event in Seattle in 2011. Rover was then incubated inside Seattle-based Madrona Venture Group in its early days.

Rover now bills itself as the “world’s largest online marketplace for pet care,” matching pet owners with sitters for boarding, daycare, walks, grooming, and more. There are more than 500,000 caretakers on the platform, which has facilitated more than 40 million services across the US and in nine other countries.

The company’s business plummeted at the outset of the pandemic as demand for pet decreased care with the lack of travel and people working from home. It cut 41% of its workforce in March 2020.

But Rover’s gross booking volume has bounced back this year. Total bookings reached a record 421,000 in June, up from 373,000 in June 2019 (Rover uses 2019 for comparable metrics due to the pandemic affecting 2020 financials). Gross booking volume hit a record $56.6 million in June, up from $41.7 million in June 2019. Rover also had its largest month ever for new customer growth in June, with 99,000 new bookings.

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“We think we’re just getting started,” Rover CEO Aaron Easterly said in an interview with GeekWire. “When you look at the growth, the records in June, our new customer acquisition, it really does suggest to us how much more runway we have to go build this business and be an integral part of a pet owner strategy for care.”

Easterly, a former advertising executive at aQuantive, will continue to lead the company as CEO. He said going public will help Rover pursue acquisitions, roll out new offerings, and continue to invest in technology that helps fuel the marketplace matching mechanisms. The cash also provides insulation from “the ebbs and flows of the pandemic,” he said.

Following its acquisition of rival DogVacay in 2017, Rover has become the dominant pet sitting platform in the US Easterly estimated that the company is “16 or 17 times” larger than its nearest competitor — likely Wag, a Silicon Valley-based company that was previously backed by SoftBank.

Easterly said Rover’s main competition in the US continues to be the friends, family, and neighbors that pet owners have traditionally used to look after their pets while out of town.

As Rover has grown, it has also come under scrutiny for pets that have gone missing or even died under the watch of its sitters. It’s a challenge faced by other gig economy companies such as Uber that use independent contractors instead of employees.

CNN Business last week highlighted several pet owners who dealt with problems using Rover and said they didn’t receive adequate support from the company.

Asked about the CNN Business story, Rover provided this statement:

“Our mission is to make it possible for everyone to experience the love of a pet. As a team motivated by a shared love of pets, we’re committed to helping people access quality pet care, so it weighs heavily on our hearts if someone has a negative experience. We work every day to improve the platform so that every experience on Rover is a positive one.”

Easterly said the safety of pets and humans on Rover marketplace is “job one.” He said the company is aware that with scale comes more potential for dissatisfied customers.

“You need to be able to look at those things and say, ‘hey, is there anything we could be doing differently, is there anything we can learn?’” Easterly said.

In an investor presentation from earlier this year, Rover projected $97 million for 2021 revenue and $201 million in 2022. Rover expects to be profitable by 2022, with $35 million in adjusted EBITDA. It recently raised its full year projections in May, and will report its second quarter earnings next Monday.

Rover had raised $281 million in equity funding, including a $155 million funding round in 2018 that valued the company at a reported $970 million. Its private investors include A-Grade Investments, CrunchFund, Foundry Group, Madrona Venture Group, Menlo Ventures, Petco, Rolling Bay Ventures, TCV, and Spark Capital.

Rover moved into a new 75,000 square-foot headquarters in Seattle just before the pandemic hit. Easterly said the company plans to keep the space, but employees will have more options to work from home.

Rover employs 320 people worldwide — up from about 275 when it made layoffs in March 2020 — including 200 at its Seattle HQ and another 81 workers in Spokane, Wash. It’s the latest Seattle-area company to test the public markets this year. Others include Icosavax, a biotech firm that had its IPO last week. Nautilus Biotechnology, another company that went public via a SPAC deal, went public in June.

True Wind, the SPAC sponsor, is a San Francisco-based private equity firm that manages more than $2 billion and has public company experience with firms such as GoDaddy and NXP. It participated in its first SPAC last year, taking automated lending platform Open Lending public in June 2020. The firm also has several other SPAC vehicles.

SPAC mergers last year became popular alternatives to the traditional process for initial public offerings, offering a faster path to going public. Also known as “blank check” companies, SPACs typically do not have an established business and are used to raise funds via public offering for a future merger or acquisition by a specific deadline.

The craze around SPACs cooled this year. Part of the reason is a delay in SPAC deals due to a revised approval process from the SEC, The Information reported. Some companies are also seeing less cash than expected because SPAC shareholders can take back their money before voting on a deal; this can also result in slashed valuations. For example, Rover said it planned to raise $325 million from the SPAC merger, but ended up raising $240 million. The aftermarket performance of SPACs fell more than 20% after reaching a peak earlier this year, according to the IPOX SPAC Index.

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