Wag Labs, a US-based pet services provider formerly backed by internet and telecommunications group SoftBank, yesterday agreed to a $350m reverse merger with special purpose acquisition company CHW Acquisition Corporation.
Founded in 2015, Wag offers an array of on-demand pet services through an app that include dog walking, in-person and digital training services, petsitting, insurance comparison and expert consultations regarding a pet’s behaviour.
CHW Acquisition Corporation closed a $110m initial public offering on the Nasdaq Capital Market at $110m in August 2021, and the combined company will be rebranded Wag! Group Co. following the close of the merger.
The transaction is backed by an undisclosed amount of funding from existing Wag investors such as Battery Ventures, General Catalyst, Acme Capital and Tenaya Capital while Blue Torch Capital is provided $30m in debt financing.
SoftBank’s Vision Fund agreed to invest $300m in Wag in January 2018 at a valuation of $650m. The company had previously been reported to be seeking only $100m before SoftBank made an offer, causing other prospective investors such as New Enterprise Associates and Kleiner Perkins to drop out.
The following year, SoftBank agreed to sell the stake back to Wag as part of a restructuring process which would also involve a reduction in staff numbers. It followed reports earlier that year that Wag was seeking a sale, with pet food and supplies retailer Petco being mooted as a potential buyer.
Petco however, was already an investor in another pet services provider, Rover, which itself listed in August 2021 through a $1.6bn reverse merger with blank cheque company Nebula Caravel Acquisition Corp.
The global pet care market was sized at almost $208bn in 2020, according to Fortune Business Insights, and is expected to grow from $223bn this year to $326bn in 2028.
Other pet-focused companies have been raising money in recent months, including US-headquartered pet antibody treatment developer PetMedix, which secured $37m in a September 2021 round featuring internet group Tencent and pharmaceutical and veterinary group Kyoritsu Holding.
A month earlier, SoftBank’s Latin America Fund had invested in a $150m round for Brazil-based online pet product retailer Petlove that included insurance provider Porto Seguro.
Wag’s chief executive, Garret Smallwood, said: “Our announcement today represents a significant milestone in our journey to build the leading premium wellness and services platform for pets. We are transforming the fragmented and largely offline pet wellness and services industries through our vertically integrated mobile-first technology platform.
“This deal will provide us with the funds to further fuel our growth, and I am excited to be partnering with the CHW team to accelerate our strategic initiatives and consolidate pet wellness and services as we strive to become the leader in this space.”
Wag expects to increase revenue 120% year on year to $42m in 2022, powered in part by its subscription service, Wag! Premium, which accounts for roughly 40% of its active user base.
Photo courtesy of Wag Labs, Inc.
