The venture arm of General Mills is making its first outside investment in pet food and chose a startup that sends fresh-cooked meals directly to the homes of dog owners.
301 Inc., charged with finding the latest and greatest in food trends on behalf of Golden Valley-based General Mills, believes many pet owners are willing to pay a premium for a subscription meal-delivery service for their furry friends.
301 Inc. and DFE Capital Management are co-leading a $9 million Series A funding round for Pet Plate, General Mills announced Monday.
General Mills made a giant leap back into the pet food market two years ago by acquiring Blue Buffalo Pet Products for $8 billion. While Blue Buffalo is considered a higher-end dry dog food brand, a startup like Pet Plate captures a tier of pet parents willing to pay even more.
New York-based Pet Plate appeared on ABC-TV's "Shark Tank" several years ago, but the company was denied a deal. Instead, founder Renaldo Webb grew the business himself using the publicity received from his appearance on the show.
Since the "Shark Tank" episode aired in 2016, Pet Plate has prepared and sold more than 9.2 million meals for dogs — with names like Barkin' Beef and Lip-Lickin' Lamb — in 48 states and Washington, D.C. Pet Plate plans to use the funds to scale the business further and offer new meal options as well as supplements.
Pet Plate's meals are formulated by the company's resident veterinary nutritionist and then "kettle cooked" using human-grade food ingredients like ground turkey, butternut squash, quinoa, lamb liver, apples and broccoli. The subscription prices vary by breed, dog size, age and activity level. For instance, feeding an active but small adult Labrador retriever would cost $119.26 per week, according to the company's website.
"The pet food category is one of the largest food categories in the U.S., and it's still growing," John Haugen, managing director of 301 Inc., said in a statement.
He said pet owners are looking for the same quality meals for pets that they want for themselves. "Which is why we believe in the customer-centric approach that Pet Plate has taken," Haugen said.
301 Inc. is using much of the same rationale for this investment as General Mills did when acquiring Blue Buffalo. The company cites data from Packaged Facts, which places the U.S. pet food market's value at $30 billion and growing 2.6% per year. This is a faster-growing market than the human food segment where General Mills usually plays. The biggest growth area in pet food is with so-called premium brands, which is expected to surpass traditional mass-marketed brands in sales by 2027.
Unlike acquisitions, General Mills uses these 301 Inc. investments as a way to test out new food trends to see if it's something it wants to formally bring into its portfolio. To date, General Mills has not acquired any of the smaller brands it has invested in through 301.