Vets First Choice of Portland, which provides e-commerce services to veterinary clinics, has received a $223 million investment to accelerate the company’s growth and hiring, launch new services and begin a global expansion effort into Europe and Asia.
The venture capital funding represents the largest sum invested at one time in a privately held Maine company in at least two decades, and possibly ever. The magnitude of the investment, along with Vets First Choice’s rapid growth, bodes well for its chances of becoming a publicly traded company in the future.
“We clearly have an investor base that includes a lot of public funds and public investors,” said Benjamin Shaw, the company’s co-founder and CEO. “We’re certainly maintaining our options. I think the company would do well as a public company.”
It is in the midst of doubling its employees, from 400 to 800, to accommodate the growth.
New York-based Clayton, Dubilier & Rice and Beijing-based Hillhouse Capital Group led the investment round, with participation from Viking Global Investors, Wellington Management Co., Rock Springs Capital and Sequoia Heritage, according to a statement from the company.
“Vets First Choice is creating powerful insight into gaps in patient care and helping to drive greater engagement and better health outcomes for our veterinary practice partners and their clients,” Shaw said. “This strategic investment will allow us to accelerate adoption of our proven platform and to support development of more advanced population health services on a global scale.”
GROWING INDUSTRY
In 2016, U.S. pet owners spent $17 billion on veterinary services and $15 billion on supplies and over-the-counter medications for their pets, according to the American Pet Products Association. However, local veterinary clinics have seen their share of that revenue shrink as more customers have turned to online retailers such as PetMeds and Amazon for medications and other supplies.
Vets First Choice seeks to solve that problem by offering outsourced online pharmacy services to veterinarians, allowing the vet to retain local customers while competing on price with online suppliers. From pet owners’ point of view, the online store appears to be operated by their local vet, but it’s actually Vets First Choice that is filling and shipping the orders from its massive pharmacy in Omaha, Nebraska.
The winning business model has allowed Vets First Choice to grow quickly – the company provides technology and support services to more than 20,000 veterinary practices. Now, it wants to take the business model international.
“Veterinary medicine is very much a global market,” Shaw said.
Earlier this month, Shaw was recognized by Ernst & Young as a New England Entrepreneur of the Year. Shaw said at the time that the company expected to double its workforce to 800 by year’s end because of increased demand for its products. On Wednesday, Shaw told the Portland Press Herald that the company also expects to double its 2016 revenue this year, although he declined to provide a dollar amount. In 2016, when the company made Inc.’s list of 5,000 fastest-growing companies, it reported 2015 revenue of $61 million.
“We’re experiencing very significant growth in our Portland offices,” he said. “We have a very significant number of positions available in Portland.”
A Clayton, Dubilier & Rice fund previously invested in Vets First Choice in 2015. Betsy Atkins, founder of Baja LLC, and Terry McGuire, founder of Polaris Partners, have joined the company’s board of directors, the company’s statement said. A representative from Hillhouse also will join the board.
“Today’s investment further supports Vets First Choice’s ability to create transformational value in helping veterinarians serve their patients better and build their practices more effectively,” said David Shaw, co-founder and chairman of Vets First Choice, in the release.
David Shaw, who helped found Idexx Laboratories Inc., a veterinary device manufacturer based in Westbrook, is Ben Shaw’s father.
“We are grateful to all of our investors for their support and belief in our vision,” David Shaw said.
Founded in 2010, Vets First Choice has developed a platform that allows vets to track medication and service compliance to close gaps in pet care, the company’s statement said.
“Vets First Choice is a game-changer for veterinary practitioners,” said Ravi Sachdev, partner at Clayton, Dubilier & Rice, in the release. “We are providing groundbreaking technology and valuable insights to empower veterinarians to drive practice results and patient outcomes.”
Ben Shaw said Vets First Choice has benefited greatly from Idexx, Maine’s largest publicly traded company. David Shaw and other members of the Vets First Choice management team have brought expertise they developed at Idexx to the company, he said.
“They have a really great insight into how you win on a global basis,” Ben Shaw said.
J. Craig Anderson can be contacted at 791-6390 or at:
Twitter: @jcraiganderson
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