A year ago (give or take 10 days) I wrote about Dogster Inc. – the maker of the highly popular dogster.com and catster.com – turning profitable, an unusual fate among Web 2.0 companies. It was still a very small business, but gave co-founders Ted Rheingold, John Vars and Steven Reading a foundation to grow their company at the pace free cashflows were being generated. Up until then I had considered Dogster as an amusing parody of other social networking sites, and suddenly realized that there might be much more than met the eye.
A few metrics caught my attention: the size of the user base, the consistent growth, a promising ARPU (Average Revenue Per User) and a CPM which was higher than I expected, thanks to an advertising program that was more than pure banner and text ads. These metrics doubled in a few months, allowing the company to scale its operation to 10 salaried employees while increasing its cash balance. The other thing increasing was the list of brand advertisers interested in reaching out to this thriving community of passionate dogs and cats lovers, including the likes of Disney, Target, PetSmart, Clorox/FreshStep, Gap/Old Navy, Warner Brothers, Nintendo and VPI Pet Insurance.
As the company turned in its first six-figure revenue month, it became clear that the small Dogster “niche” was turning into a real business. The economics of that market are indeed significant: 63% of US households have cats or dogs (160M pets total), yearly spending is around $36B, and advertising budgets on pet products are in the billions of USD. It also became clear that the solid organic, and profitable, growth of Dogster could sustain a bit of a booster in the form of an outside financing – which leads to today’s news.
A couple of hours ago, CEO Ted Rheingold announced on the Dogster blog that the company had closed a $1M Series A financing from a roster of angel investors – mixing successful Internet entrepreneurs and experienced investors. As a matter of disclosure, but you already guessed, I am thrilled to be involved in this great syndicate (*). Joining the Dogster board as the representative of Series A investors is Michael Parekh, an active angel investor – and blogger, who in a previous life founded the Internet Research activity of Goldman Sachs. The official press release is here.
Dogster will be using these funds to accelerate the development of new features, hire a number of new employees including a kick-ass Marketing Director, launch a number of new properties in -ster, build new distribution partnerships like the VideoEgg or Userplane one, and more generally have additional means to engage and support our users.
Staying true to the values of the community as it grows 4 to 5–fold over the next 12 months is certainly going to be challenging for the team, but I have total confidence in their ability to bring the company to the next level. Congratulations for the success to date, best of luck for the future.
And yes: Woof!
Oh, I was SO waiting for that headline: “the bubble is back, the new sock puppet got funded”. Greg (Linden), have you noticed the “profitable for 3 quarters”, “positive cashflows”, “making money” mentions ?
(*) Just to list a few of these angel investors: Joshua Schachter - del.icio.us./Yahoo, Adam Beguelin - Truveo/AOL, Michael Tanne – Wink, Jim Young – hotornot, Mike Arrington – TechCrunch, Mike Jones - Userplane/AOL, George Sarlo - Walden Funds, Frank Caufield - Darwin VC, Aydin Senkut - Felicis Ventures, Robert Simon - Alta Partners, Brad Feld – Mobius Ventures,… and more.
- Yes, it is true that Dogster had several funding avenues, and the team elected to only raise a $1M round that ended up being oversubscribed (a lot).
- A great coverage is developing: Matt Marshall on VentureBeat, Liz Gaines on GigaOm, Dan Farber on ZDNet, Bambi Francisco, Tom Taulli on BloggingStocks.
- Rafat is already betting on a CNet take-out. Dude, please let me pay long term capital gains on an exit for once.
- Here is the TechMeme thread.