Vet Startup Modern Animal In 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 vets, is expanding, fueled by a Series C funding round that gave it an additional $75 million in investment capital.

The West Coast-based vet startup is preparing to double its locations over the coming year, with the additional capital used to open new clinics in California, and to expand nationally.

The expansion comes as a number of next-generation veterinary startups are vying to become the pet health care provider for millions of new pet owners.

Modern Animal has four clinics in Los Angeles, and last week it opened it first San Francisco-area clinic. The company plans to add three additional clinics in the Los Angeles area, and three additional San Francisco locations this year and into 2023.

It has announced its Series C funding round raised an additional $75 million in capital, bringing its 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 gives them free exams, and 24/7 access to vets and vet technicians by phone, video, or text, as well as digital tools for making appointments and keeping track of 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 seeking to win over younger pet owners, and veterinarians, with a more digitally-savvy experience. All of the startups, on their websites, highlight the need to create a model that works better for everyone involved – the pets, the vets, and the owners.

Pet adoptions surged in 2020, with more than 12 million American households adopting animals during the first 10 months of the pandemic, creating many new millennial pet owners, and sending demand for vet services soaring.

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 veterinary clinics and hospitals after a pet tech company he co-founded was acquired by a national vet hospital chain.

Eidelman said he quickly saw two big problems. The experience at the clinics was unpleasant for the owners and pets, and the unsustainable working conditions were making the vets miserable.

“Our goal is to build the most progressive veterinary experience on the planet,” Eidelman said. “We have to rethink these assumptions that have been in this industry for 30 years – they just do not work for pets and their owners and they do not 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 by text or video chat, and access records, while creating an employment model that addressed the concerns of overworked vets.

For vets, Modern Animal promises better work-life balance, with flexible scheduling, predictable hours and a compensation plan that replaces the revenue or production-based compensation model, where a vet’s salary depends on how many expensive surgeries or treatments he or she performs. Modern Animal instead uses set salaries and gives its vets equity in the company. It also invested in designing its clinics to be attractive, calm work spaces for vets.

“What’s incredible about the veterinary space is you have this population of people, most of whom have wanted to be veterinarians since they were kids,” and yet the way they were being treated by the vet hospital industry was creating massive burnout and causing vets to leave what had been their dream careers, Eidelman said.

“You had an incredibly high churn rate in the industry. You had one of the highest suicide rates of any profession,” Eidelman said. “You have an industry that has completely shifted and done a full 180 in terms of the demographics. It used to be 80 percent men and now close to 90 percent graduating from vet schools are women,” creating a vet population with different needs for work-life balance, he said.

Modern Animal adopted a membership model for its business, Eidelman said, as a way to eliminate the situation where a pet owner hesitates to contact a vet, or make a costly appointment, to check on something when there is nothing wrong with the animal.

“With the traditional veterinary appointment, you’re paying an exam fee every time you step foot in the door,” he said. Giving members 24/7 access to vet techs and doctors via text and video lets pet owners avoid appointments if nothing’s wrong, “and makes sure we’re able to preserve our resources and our appointment availability of something is really wrong,” he said.

Modern Animal incorporated in 2018 and was preparing to open its first clinic, in West Hollywood, when the pandemic hit. That clinic opened in April, 2020, and immediately was hit with so much demand that it had to limit memberships.

Once a new clinic is up and running, it typically can handle 1,000 members per doctor, or 5,000-6,000 per clinic, Eidelman said. The company currently has about 20,000 members.

The company’s first three clinics are profitable on a per-clinic basis, and the clinics tend to become profitable within a few months of opening, he said.

The biggest challenge the company faces currently is recruiting vets and vet technicians and assistants. “We try to be creative about it because at the end of the day every veterinary clinic is struggling to hire,” Eidelman said.

This spring, Modern Animal exhibited at a veterinary conference in San Francisco and used a tattoo parlor theme at its booth, handing out tattoo stickers, and partnering with a local tattoo parlor to give real tattoos. That theme proved to be a draw, 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 staff have tattoos – often with deeply personal stories behind them.”

Another challenge Modern Animal faces is competition, not just from a growing number of startups, but from the biggest pet retailers that also are trying to grab a piece of the pet health care space.

Petco, PetSmart, and online retailer Chewy all are targeting vet services, and pet health and wellness as a prime growth opportunity.

Bond Vet, the East Coast-based chain modeled as a pet version of City MD, or other urgent care center, is also growing rapidly. It has expanded from 11 clinics at the start of the year to 16 currently, and it expects to have more than 30 in operation by the end of the year. Its clinics are in New York, Boston, and Washington, D.C., with locations in New Jersey, Connecticut, and other East Coast locations in the works.

Modern Animal also has competitors nipping at its heels closer to home. 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 realize the veterinary industry needs dramatic change.

“The fact that there’s this much capital going in to push new ideas forward – and not just the old trend of [vet hospital and clinic] consolidation is really exciting,” he said.

“The more people trying to drive change, the better it is for all of the human stakeholders, and more importantly for the animals themselves.”