The Business of Emotional Support

Issue #57

April 16th, 2024

Quick Hits:

🎼 A waggin’ tail turns into an amazing symphony…well, kind of…

🐱 Cats are making hiss-story in Hollywood

🚘 OK, it’s time to go home!!!

💪 Golden Strong

Since the pandemic, there has been a dramatic rise in the number of emotional support animals. We wanted to find out the difference between ESA & service animals, how one attains this certification, who are the leaders in this space, costs, and more… So let’s dive in.

Firstly, what is ESA? An ESA (Emotional Support Animal) is a dog or other pet (we’ll address that later on) that is “certified” by a practicing Licensed Mental Health Professional (LMHP) and must include their license number, type, and the date it was issued and typically has to be renewed every year.

The ESA letter states that you have a mental condition that qualifies for an Emotional Support Animal “prescription”.

Millions of people throughout the U.S. and the world struggle with emotional issues that affect their day-to-day lives. PTSD, depression, anxiety, OCD, phobias, and many more issues that can be debilitating for many. For those, ESA’s can be an absolute lifesaver.

However, this “loophole” that allows almost anyone to easily attain an ESA letter has undoubtedly been taken advantage of by some and also opened the floodgates for many scam websites & services that have popped up in recent years.

Lately, ESA letters have come under scrutiny when people started abusing this loophole by bringing their ESA ducks, pigs, ponies, turkeys, and yes even a joey (baby kangaroo) on flights which ultimately made some airlines take ESA privileges that were previously afforded away. In 2021 the U.S. Department of Transportation decided that airlines no longer need to accommodate emotional support animals. Before this, all airlines were required by law to accommodate owners of ESAs with proper documentation.

While in Europe dogs are allowed in most places (coffee shops, restaurants, hotels, supermarkets, etc..) here in the US they’re still largely not allowed in most of these, and unbeknownst to most, ESA letters don’t change this. ESA really only applies to apartments, not private businesses. If the business is not pet friendly your ESA pet will not be allowed in, which is not true for a service animal which are allowed everywhere!

Emotional support animals are not the same as service animals.

A trained service dog can cost from $10,000 to $50,000 upfront, depending on the type of skill the dog has to learn. For the most part, no insurance covers this but some nonprofits do help those who need service dogs but can’t afford it.

Service animals are allowed everywhere, even in businesses that clearly state “no pets” while emotional support animals cannot enter these establishments.

The Americans with Disabilities Act (ADA) defines a “service animal” as a dog that has been individually trained to do work or perform tasks for an individual with a disability. Animals are considered service animals under the ADA regardless of whether they have been licensed or certified by a state or local government. Because emotional support animals have not been trained to perform a specific job or task, they do not qualify as service animals under the ADA.

Business owners are not allowed to request any documentation for the dog, require that the dog demonstrate its task, or inquire about the nature of the person’s disability.

How do I get my dog ESA certified?

There are a bunch of companies that offer this service that range from $100 to a few hundred dollars depending on your needs. There are a few leaders in this category but as we mentioned earlier…

There are many scam websites/services out there, so if you plan on doing so, please do your own research before paying or giving your information to anyone!

The 3 leaders in this space are:

• CertaPet

• Pettable

• ESA Doctors 

Getting an ESA differs from state to state but generally speaking, the process goes like this:

1. Complete an online assessment about your mental health and ESA needs.

2. Pay the necessary fees.

3. A phone consultation with a licensed mental health professional.

4. The therapist either confirms or denies your application.

When you have an ESA letter for housing, your landlord must waive all pet fees, pet application fees, and pet deposits.

While it is difficult to determine the size of the market or get any hard figures. It’s safe to say that it’s a growing industry with hundreds of thousands of customers which will likely keep growing alongside the mental health crisis the US is experiencing and the growing attachment we have to our pets.

According to Mental Health America from 2019-2020, 20.78% of adults were experiencing a mental illness. That is equivalent to over 50 million Americans, and that number is only growing.

Some websites have both Pettable and CertaPet’s annual revenue at around $2m (which seems low) but again because of the nature of the business and regulatory ambiguity that exists around it, it’s difficult to know exact figures.

The ESA industry faces several challenges moving forward, chief amongst them concerns about fraudulent certifications but also misuse of ESA privileges, and the need for clearer guidelines and standards.

Here are some numbers:

• 74% of pet owners believe their mental health improved after getting a pet

• 75% of dog owners in the US take their canine companions along for rides and adventures

• Men are more than twice as likely to have a certified ESA as women, with 71% of ESA owners being male and 29% being female.

• Patients with total joint replacement needed 50% less pain medication with canine therapy.

• Over 60% of US colleges have a pet therapy program.

• It takes roughly 18 months to train a service dog.

• There are an estimated 500,000 service dogs in the United States.

• 50% to 70% of dogs in training through a service training organization do not successfully become registered service dogs.

• Owning a dog has been proven to reduce the risk of heart disease by 36%.

• 60% of hospice care providers provide alternative therapies including pet therapy for patients.

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Growth strategy

Some of the investors we speak to have highlighted specific questions related to growth strategy. The reality is, that most investors want a clear path/vision to growth.

Growth = more value = improved returns. So, we thought we would cover two key strategies at a high level and delve into each one in more detail in future posts. A company/business often has two ways to scale: organically and inorganically (or perhaps a combination of the two).

Let's better understand what each means and when each applies:

• Organic - This route effectively means that you scale your business within your own company. I.e. more sales, perhaps expansion into new markets, or an expansion into adjacent products. You often see this growth strategy in earlier / smaller businesses, because it's less capital-intensive than the inorganic route. There are different strategies here such as product-led growth (PLG) and others which some investors appreciate.

• Inorganic - This route effectively means that you scale your business by acquiring or perhaps investing in other businesses. Most likely you are partnering with someone who already has an existing product/position that you want access to quickly. This route does tend to require more capital and a different set of expertise and you often encounter it in later-stage business and/or private-equity-backed organizations. Here you will have different considerations such as negotiating a deal or perhaps incentivising a new team to grow an acquired business.

As you think about your business, how do you envision generating growth in the short/medium term? Does one of these appeal more or suit more to your business/expertise?

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Purr-ple.

See you Thursday!