Birds Are Real

Issue #27

October 10th, 2023

Quick Hits:

🔥 This new HVN x Wild One collaboration has people talking

💰 Pets Wants - franchise breakdown

🚗 Better than chasing a squirrel

💵 Amazon deals for your fur baby

🐹 Find the hamster

👨 The Brad Pitt of dogs

Birds - Those graceful creatures that seamlessly whiz through the sky without a care in the world, with their beautiful colors, have captivated our imaginations and inspired us for a long time.

Next time you’re flying at 30,000 ft from NYC to London, take a second and thank birds. Birds inspired Lilienthal (The Man Who Inspired the Wright Brothers) a German engineer and a student of aerodynamics. His early ideas for human-powered flight came from birds.

Birds have always represented hope, peace, freedom, and the spirit of independence. Even the Declaration of Independence was signed using pens made from the flight feathers of geese and swans.

Currently, there are around 40 - 45 million pet birds in the US. While pet ownership is on the rise, especially with Gen Z, it is by no means a new phenomenon.

Parrots and other birds with the capacity for speech have been kept as pets for thousands of years. The ancient Egyptians, Greeks, and even Romans all kept birds as pets.

In fact, The name of Aristotle’s bird is the root of the scientific name for all parrots, Psittacine.

Just like any other animal we domesticated, we found ways to use birds to our benefit. While most of these jobs are no longer needed, at the time they were very helpful.

• Canaries in coal mines

• Cormorant fishing

• Homing pigeon

• Hunting

And more…

Nowadays these are some of the most popular birds:

• Parakeet

• African Gray Parrot

• Cockatiels

• Lovebird

• Cockatoo

• Canary

• Finch

However, what many people fail to realize is that, unlike dogs and cats, birds are a lifelong commitment. Something many bird owners find out after the fact. Parrots, for example, are a 30-50-year gig and should not be taken lightly. Additionally, they tend to pluck their own feathers when they are deeply stressed, which can be caused when they are removed from their owners.

The Market

No surprise here, Gen Z is the biggest market for birds and is around 46% of pet ownership in the US.

The USA bird food market is projected to reach $3 billion in 2023. By 2033, it is anticipated to reach $4 billion. From 2023 to 2033, it would expand at a CAGR of roughly 2.5%. The USA accounts for around 25% of the worldwide pet food market. 50% of new bird owners said the pandemic was a factor in their acquiring their feathered companion. Bird owners are also likely to have multiples, the average number of birds per bird-owning household is 2.46.

Birds are the third most common pets in Europe. In 2022, the European pet food market grew to EUR29.1 billion (US$31.1 billion) with an average 5.1% annual growth rate during the past three years.

Recent numbers released about bird ownership in Europe (in millions):

• Italy - 12,882,000

• Spain - 6,991,000

• France - 5,800,000

• Germany - 4,900,000

• Russia - 3,280,000

• United Kingdom - 1,600,000

While numbers vary, birds are one of the most popular pets in the US

Trends of toys and accessories will continue to grow as bird owners learn what birds need - good foods for healthy bodies and great stimulating toys for their innate inquisitive nature.

There is currently an opportunity for specialty bird stores since there aren’t a lot of specialty bird stores around. So any place that does cater to that specialty bird market is seeing a pretty big boom. As far as sales are concerned, between cages, food, toys, and other bird products, the avian category is growing overall with strong sales in all segments.

Some best sellers include:

• Bird poop remover

• Food

• Supplements

• Treats

• Nesting pads

• Cages

Onto the bizarre:

Recently, birds have even inspired the “Birds aren’t Real” movement that claims that since 1959, the government has killed all the birds and has replaced them with spy birds that constantly monitor our every move.

So perhaps all the birds we currently have as pets are actually just robots in feathers?

• Umbrella AI -Is bringing modern aspects of the tech industry to disrupt and elevate pet care.

• Mars x Digitalis Ventures - Just launched a $300M fund to back pet health startups in the US and Europe.

• Voff keeps acquiring - Voff Premium Pet Food acquired Netherlands-based dog and cat food manufacturer Carnibest for an undisclosed amount.

• Oncotect - Can worms detect cancer in dogs?

• Basepaws goes dog - The cat DNA testing company launches dog DNA Test.

• Hungry in Hungary - Nestlé has invested nearly $245.5m in two new production factories for Purina in Hungary.

PAWS right there!!! Don’t forget to subscribe 👇👇

• People food no-no’s - A few items you should never feed your dog.

• Solid gold - Plasma-powered functional treats are now a thing.

• Vegan for the planet? - Would you switch your dog’s diet to a vegan diet?

• Pom Pom - Gingivitis be gone. Apparently, pomegranate water drops reduce plaque and tartar.

• Functional jerky - Cooper & Friends recently introduced a new line of functional dog treats. Seems like functional is the hot buzzword right now.

• Whiskas reimagined - Mars just launched new enhanced recipes and modernized packaging in Australia.

• Recall - Carolina Prime Pet, Inc. has recalled five varieties of jerky pet treats after testing positive for Salmonella.

• It’s back! - After being canceled, The Tompkins Square Halloween Dog Parade is officially back.

• Department of Defense official charged with running dog fighting ring - We hope he goes to prison for a very long time.

• Drug sniffing dogs - A puppy kindergarten run by Mexico's army.

• Dog fined for speeding - This dog got caught red-pawed.

• Florida got it right - An update to Florida's "Dangerous Dogs" law effectively prohibits local governments from banning pit bulls.

• Swimmin’ to Slimmin’ - The only way for this lazy cat to lose some lbs was in the water.

• Glow in the bark - Apparently, your cat (alongside many other mammals) glows in the dark.

• No, you are not wrong, your cat is in fact perfect - Cats have attained evolutionary perfection.

• Number 1 - Portugal has the most dogs in Europe per capita at 0.25 per person.

Following our post last week, we thought we would write a bit more about some terms you may see when raising money from investors. Here goes…

Type of equity: You may see investors asking for what’s called preferred equity vs. ordinary equity. You should be aware of the difference here and be clear on the details, particularly the economics each carries. Preferred equity is exactly what it says on the tin, “preferred”. So if you, for example, distribute a dividend, or more likely, sell your business, those investors who hold preferred equity, get their share of the proceeds first. It’s also possible that this preferred equity accrues interest so by the time you exit your business a certain minimum valuation needs to be achieved in order for you to see your reward (via the ordinary equity), so be aware of the terms and run the numbers to know when you start seeing your own return!

Liquidation preference: This term is very much related to the concept of preferred equity and it directly stipulates what is the minimum return that an investor is asking for as part of a liquidity event. So, for example, if an investor is asking for a 2x liquidity preference, and the investor invested $500k, that investor will have to receive $1m (2 x $500k) before anyone else gets any proceeds. You should note that liquidation preference applies in both successful situations as well as, well, unfortunate situations such as liquidations. Be clear on the terminology and the math. If, in the above example, a company is sold for $750k, the investor gets the whole amount, as it is below the $1m mark.

Drag/tag and other “legal-ese”: Make sure you understand what you are reading. A drag-along stipulates the conditions for an investor/party to drag you into a deal. A tag-along stipulates when you have the right to “tag-along” other investors in a deal. You could also have things such as pre-emption rights, information rights, board seats, and reserved matters. Lots of terms and lots of moving pieces. Don’t be afraid to ask any questions here.

One last point worth noting, a lot of these terms would depend on what’s “market” when you go on your raise. So, make sure to either get some advice or better yet, ask other founders in the community who have recently done a raise for what’s acceptable these days. You always see 20/20 in hindsight… Good luck!

You reached the end, you deserve a treat 🍖

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Finally, why do birds fly south in the winter?

Because it's too far to walk!

See you next week!

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