Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Mad Paws IPO
Forget cramped kennels or pleading with reluctant relatives for help, the Mad Paws platform connects you with your nearest pet-sitter. A simple online reservation is all it takes, so you can sit back while the perfect person looks after your favourite animal. Your pet -itter can look after your animal at your home or take it home with them. The platform is even capable of sending photo updates so you can be rest assured your pet is being looked after.
Mad Paws was largely co-founded in 2014 by Justus Hammer (Group CEO), Alexis Soulopoulos (CEO New Business) and Jan Pacas (Chair), with a vision to make pet ownership easier and the aspiration to create Australia’s #1 pet services marketplace. Mad Paws began as a Sydney-based start-up created for pet lovers looking for an affordable yet caring and loving place to mind their favourite animal that wasn’t a packed-out pet boarding service. The aim was to assist pet owners in finding passionate and trusted local pet-sitters when they have to go away; to give owners a safe, and affordable place and to create a way to find the best sitters in your local trusted neighbourhood.
The Mad Paws database consists of over 19,000 pet service providers (pet-sitters, walkers and groomers) across Australia and over 450,000 user sign-ups (pet owners), with more than 180,000 services having been booked through the marketplace since initial launch. With 29 million pets in Australia and 40% of Australian households having at least one dog, you could say we are a pet-friendly nation. Mad Paws intends to capitalise on our love for animals by offering a host of pet-related services on its marketplace. These include dog walking, grooming and pet-sitting for dogs and cats. The platform also will host a subscription pet food service called Mad Paws Dinner Bowls.
Upcoming IPO
According to reports the company is seeking to raise $12 million at 20 cents a share for a March 26 IPO. A raising of that size implies a $42.9 million market capitalisation for the eight-year-old business, which is backed by Bombora Special Investments Growth Fund. The offer is being managed by Foster Stockbroking Pty Ltd and CCZ Statton Equities Pty Ltd as the joint lead managers.
Mad Paws is seeking to use the funds from the offer for multiple reasons:
- to fund organic growth;
- cement the company’s position in Australia as the dominant pet services provider
- build-out its marketplace using its proprietary technology platform;
- enhance the public profile of Mad Paws.
Business model
Mad Paws generates revenue from two main streams:
- Revenue from pet care service bookings such as pet-sitting, walking, day-care, grooming, home visits done through the platform. Service fees charged to pet service providers and booking fees charged to pet owners.
- Subscription revenue from Mad Paws Dinner Bowl pet food subscription product
The prospectus says that for each booking made through the Mad Paws marketplace, Mad Paws charges pet service providers a 20% service fee and pet owners a 7% booking fee. Revenue from Mad Paws Dinner Bowl pet food offering is generated via a weekly or fortnightly subscription service. And finally, a new Mad Paws-branded pet insurance product is expected to be launched in the first half of 2021. Mad Paws expects to receive commission revenue for each Mad Paws-branded pet insurance policy sold to new customers.
Looking at the above table, it’s clear that Mad Paws is a loss-making business, yet revenue is growing quickly – as is the case with many companies that proceed to IPO these days. The prospectus says “Mad Paws expects to continue to incur operating losses and generate negative cash flows in the near term and will not pay dividends while it continues to expand and report losses. Mad Paws has been and remains focused on profitability.” As long as Mad Paws can demonstrate its ability to expand and grow, financial performance will be dependent on its ability to successfully execute its business strategy.
All in all, this is an exciting platform in an under-serviced market, and it shows a lot of promise. There certainly is potential for Mad Paws to increase its market share in the pet services market and to create new revenue streams such that in the not-far-off distance the company can become profitable.
