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

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

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

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

The Seattle-based company will trade under the ticker ROVR on Nasdaq Monday 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 pour about $ 240 million into a company that was badly hit at the start of the pandemic but has recovered in part thanks to rising pet adoption rates and increased pet spending.

Rover CEO Aaron Easterly. (Rover photo)

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

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

The company’s business collapsed at the beginning of the pandemic as pet care demand declined due to the lack of travel and people working from home. In March 2020, the company cut 41% of its workforce.

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

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

Easterly, a former advertising manager at aQuantive, will continue to lead the company as CEO. He said the IPO will help Rover pursue acquisitions, introduce new offerings, and continue to invest in technology that will help fuel the market’s matching mechanisms. The cash also provides isolation from “the ups and downs of the pandemic,” he said.

After acquiring rival DogVacay in 2017, Rover has become the dominant pet sitting platform in the United States. Easterly estimates the company is “16 or 17 times” bigger than its closest competitor – likely Wag, a Silicon Valley-based company previously supported by SoftBank.

According to Easterly, Rover’s main competitors in the U.S. continue to be the friends, family, and neighbors that pet owners have traditionally used to look after their pets out of town.

As Rover grew, it was also screened for pets that went missing or even died under the supervision of its sitters. This is a challenge for other gig economy companies like Uber that use independent contractors instead of employees.

CNN Business last week highlighted several pet owners struggling with issues using rover and said they had not received adequate support from the company.

New: I immersed myself in a darker side of Rover, the animal services company that is about to go public. I spoke to six dog owners whose dogs have been missing or died in the care of a rover sitter since the beginning of the pandemic: https://t.co/qKfqs1ge1p

– sara ashley o’brien (arasaraashleyo) July 30, 2021

When asked about the history of CNN Business, Rover made this statement:

“Our mission is to enable everyone to love a pet. As a team that is motivated by a shared love for pets, we are committed to helping people gain access to high-quality pet care. We work every day to improve the platform so that every experience with Rover is a positive one. “

Easterly said pet and human safety in the rover market is “job one”. He said the company understands that there is more potential for dissatisfied customers as it grows.

“You have to be able to look at these things and say, ‘Hey, is there something we could do differently, can we learn something?'” Easterly said.

In an investor presentation earlier this year, Rover projected $ 97 million in 2021 and $ 201 million in 2022. Rover expects to be profitable through 2022, with adjusted EBITDA of $ 35 million. It recently raised its guidance for the full year in May and will release its second quarter results next Monday.

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

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

Rover has 320 employees worldwide – up from about 275 in March 2020 layoffs – including 200 at its Seattle headquarters and 81 in Spokane, Washington. It’s the newest company in the Seattle area to test the public markets this year. Others include Icosavax, a biotech company that went public last week. Another company that went public through a SPAC deal, Nautilus Biotechnology, went public in June.

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

SPAC mergers over the past year have become popular alternatives to the traditional IPO process, providing a faster path to going public. SPACs, also known as “blank check” companies, typically have no established business and are used to raise funds through a public offer for a future merger or acquisition within a specified time frame.

The enthusiasm for SPACs has cooled this year. One reason for this is a delay in closing SPAC deals due to a revised SEC approval process, The Information reported. Some companies are also seeing less cash than expected as SPAC shareholders can withdraw their money before voting on a deal; this can also lead to abbreviated ratings. For example, Rover said it planned to raise $ 325 million from the SPAC merger, but it ended up raising $ 240 million. After peaking earlier this year, SPACs aftermarket performance declined more than 20%, according to the IPOX SPAC Index.