Vet startup Modern Animal on a growth spurt with new funding
Modern Animal, one of a growing number of startups aiming to reinvent the veterinary clinic experience for both pet owners and veterinarians, is expanding, fueled by a Series C funding round that gave it $75 million in additional investment capital dollars.
The West Coast vet startup is preparing to double its locations in the coming year, using the additional capital to open new clinics in California and expand nationwide.
The expansion comes as a slew of next-generation veterinary startups compete to become the healthcare provider for millions of new pet owners.
Modern Animal has four clinics in Los Angeles and opened its first clinic in the San Francisco area last week. The company plans to add three more clinics in the Los Angeles area and three more locations in San Francisco this year and through 2023.
It has announced that its Series C funding round has raised an additional $75 million in capital, bringing total fundraising to $164 million. The latest round was led by Addition, with participation from D1 Capital, Founders Fund, True Ventures and Upfront Ventures.
Modern Animal uses a membership model. Pet owners pay an annual membership fee of $129 which grants them free exams and 24/7 access to veterinarians and vet techs via phone, video or text, as well as digital tools for scheduling appointments and tracking a pet’s medical history.
Modern Animal — like other fast-growing vet startups, including Bond Vet and Small Door Veterinary on the East Coast, and Petfolk in North and South Carolina — is trying to wow younger pet owners and veterinarians with a more digitally-savvy experience. All startups emphasize on their websites the need to create a model that works better for everyone involved—the pets, the vets, and the owners.
Pet adoption surged in 2020, with more than 12 million American households adopting animals in the first 10 months of the pandemic, creating many new millennial pet owners and skyrocketing demand for veterinary services.
The idea for Modern Animal was born well before the pandemic hit in 2017, when co-founder and CEO Steven Eidelman was spending a lot of time visiting animal clinics and hospitals after a pet technology company he co-founded was acquired by a national veterinary hospital chain.
Eidelman said he quickly saw two major problems. The experience at the clinics was uncomfortable for owners and pets, and the unsustainable working conditions made veterinarians miserable.
“Our goal is to build the most advanced veterinary experience on the planet,” said Eidelman. “We need to rethink these assumptions that have existed in this industry for 30 years – they just don’t work for pets and their owners, and they don’t work for veterinarians,” he said.
Eidelman’s solution was to build software and apps that would make it easier for pet owners to schedule appointments, get answers to urgent questions via text or video chat, and access records, while creating an employment model that reworked concerns Vets considered.
For veterinarians, Modern Animal promises a better work-life balance with flexible scheduling, predictable hours, and a compensation plan that replaces the sales- or production-based compensation model where a vet’s salary depends on how many expensive surgeries or treatments he or she performs . Instead, Modern Animal uses fixed salaries and gives its vets shares in the company. It also invested in making its clinics attractive, quiet places to work for veterinarians.
“The incredible thing about veterinary medicine is that there are so many people, most of whom have wanted to be vets since they were children,” and yet the way they have been treated by the veterinary industry led to massive burnout and prompted vets left to what their dream careers had been, Eidelman said.
“They had an incredibly high churn rate in the industry. They had one of the highest suicide rates of any profession,” Eidelman said. “You have an industry that has completely changed in terms of demographics and has done a full 180. It used to be 80 percent male, and now nearly 90 percent of veterinary school graduates are women,” he said, creating a veterinarian population with diverse work-life balance needs.
Modern Animal has adopted a membership model for its business, Eidelman said, to eliminate the situation where a pet owner is reluctant to contact a veterinarian or make a costly appointment to have something checked up when the animal is nothing wrong.
“With the traditional vet appointment, you pay an exam fee every time you step foot in the door,” he said. By giving members 24/7 access to vets and doctors via text and video, pet owners can avoid appointments when everything is fine, “and ensure we can conserve our resources and our availability of appointments is really wrong.” , he said.
Founded in 2018, Modern Animal was preparing to open its first clinic in West Hollywood when the pandemic struck. This clinic opened in April 2020 and was immediately hit by such great demand that it had to limit memberships.
Once a new clinic is operational, it can typically accommodate 1,000 members per doctor, or 5,000 to 6,000 per clinic, Eidelman said. The company currently has around 20,000 members.
The company’s first three clinics are profitable per clinic, and the clinics tend to become profitable within a few months of opening, he said.
The biggest challenge the company is currently facing is recruiting veterinarians and veterinarians and assistants. “We try to be creative because at the end of the day every animal hospital has trouble hiring new employees,” Eidelman said.
This spring, Modern Animal exhibited at a veterinary conference in San Francisco and used a tattoo parlor theme at its booth, handed out tattoo stickers, and partnered with a local tattoo parlor to give actual tattoos. That issue turned out to be undecided, Eidelman said.
“Right now, our big push in San Francisco is focused on veterinary technicians and assistants, and there’s a huge tattoo subculture in the veterinary industry,” he said. “Most of our employees have tattoos – often with very personal stories behind them.”
Another challenge Modern Animal faces is competition, not only from a growing number of startups, but also from the largest pet retailers who are also trying to grab a piece of the pet healthcare market.
Petco, PetSmart, and online retailer Chewy are all targeting veterinary services and pet health and welfare as key growth opportunities.
Bond Vet, the East Coast-based chain modeled as a pet version of City MD or some other emergency center, is also growing rapidly. It has grown from 11 clinics at the start of the year to 16 currently and expects to have more than 30 operational by the end of the year. Its clinics are located in New York, Boston and Washington, DC, with locations in New Jersey, Connecticut and other East Coast locations in the works.
Modern Animal also has competitors closer to home on its heels. dr Treat, a startup that also uses a membership model, just opened its first location in San Francisco.
Eidelman says he sees the competition as a sign that people are realizing the veterinary industry needs dramatic change.
“The fact that so much capital is being invested in driving new ideas – and not just the old trend of [vet hospital and clinic] Consolidation is really exciting,” he said.
“The more people try to drive change, the better it is for all human stakeholders and most importantly, for the animals themselves.”