It’s hard to miss the TV ads for high-nutrition pet food brands like Blue Buffalo and The Farmer’s Dog, with their focus on personalized meal plans and human-grade USDA ingredients. These marketing efforts speak to the growing propensity to humanize pets and households’ greater willingness to spend on their needs, whether for higher-quality food, healthcare or accessories and services.
Pet owners in the US are expected to spend about $1,700 each on their animals in 2025, a $200 increase from the previous two years, according to data from the American Veterinary Medical Association.
The broader pet care market is projected to reach $157 billion in the US alone in 2025, up from $152 billion in 2024, as the American Pet Products Association said in its state of the industry report published in March. Pet ownership continues to increase, with 94 million US households now owning at least one pet, up 14.6 percent from 82 million in 2023. More than half (51 percent) of households (68 million) own a dog, and 37 percent (49 million) own a cat.
Increased life expectancy in cats and dogs is a key contributor to market opportunities in animal health. Research findings published in 2023 from a study by Mars Inc, the owner of more than 2,500 veterinary clinics globally and pet food brands like Iams, showed increases of 5.6 percent and 5 percent for toy and small dogs, respectively, between 2013 and 2019, while the lifespans of medium, large and giant-breed dogs rose by 4.5 percent, 4.3 percent and 6.6 percent, respectively. The lifespan of purebred cats was up by 9.3 percent and 13.7 percent for mixed-breed cats over the study period.
Venture firms such as Borealis Ventures and Digitalis Ventures have been investing heavily in animal health and related subcategories for several years, while others like MIG Capital AG have more recently joined the pack.
“We hope more [VCs] are coming and see the potential of this market,” says Andreas Kastenbauer, a partner at MIG. “We are the only European VC investing in this space with this size of investments.”
Borealis, which focuses largely on life sciences, health tech and other human-related medical sectors from inception in 2001, first invested in animal health in 2010 with Vets First Choice, a veterinary pharmacy platform. Phil Ferneau, founding partner of the Hanover, New Hampshire-based firm, had known the founder, Ben Shaw, for a few years and became its first backer within a month of the company’s launch.
“We started from zero in 2010 and scaled [Vets First Choice] to nearly $2 billion of value at IPO, which returned the entire fund for us,” Ferneau tells Venture Capital Journal. Vets First Choice merged with the animal health business that spun out of Henry Schein in 2019 to form Covetrus, which was listed on Nasdaq for three years before being acquired by Clayton, Dubilier & Rice and TPG Capital in 2022.
“After [the IPO], Ben stepped down from running that company, joined Borealis as a partner and started investing in other animal health companies,” says Ferneau.
Borealis shifted its investment thesis entirely to human and animal health in 2017. It’s the first dedicated veterinary innovation fund, which closed on $36 million in 2021, that backs a wide range of companies that are developing software, services, pharmaceuticals, food and nutritional supplements. Its funds tend to be highly concentrated, investing in just eight to 12 companies, in which Borealis strives to be “pretty deeply involved life-cycle investors, even though we’re small funds,” says Ferneau.
Digitalis Ventures, based in New York, has raised two funds dedicated to investing in the needs of household pets. Companion Fund II, which closed on $300 million last year, is almost triple the size of its first Companion fund in 2018. The sole LP in both funds is Mars Inc, the world’s leading pet care company, but perhaps better known for its candy products.
Using capital from Companion Fund I, Digitalis partnered with Michaelson Found Animals Foundation, an animal welfare non-profit, and RGA Ventures to create Leap Venture Studio, an accelerator that has supported about 60 very early-stage companies. The majority are in the US, with several more in Europe and a handful in Latin America and Asia. “A meaningful percentage” of them have gone on to receive follow-on funding from the Companion Fund, including Smalls, a producer of fresher cat food, and Native Pet, a provider of cleaner supplements, or from other VC firms, Digitalis managing partner Ben Jacobs tells VCJ.
Companion Fund II was launched “in part to address opportunities we saw in Fund I to support companies all the way from founding through their growth equity rounds,” with similar areas of interest to Fund I, says Jacobs. “Anything that improves the lives of a dog or a cat, we will look at.” The fund’s interest spans diagnostics, medicine, software, information tech and online platforms and has a global geographic focus, he adds.
Borealis and Digitalis both invested in ASTRA Therapeutics’ $9.7 million funding round in July. The Swiss company is developing precision-designed parasiticides as a safer and more effective alternative to existing chemical treatments, which not only harm animals but are becoming less effective as parasites develop up to 90 percent resistance to them.
Another investor in ASTRA is Munich-based MIG AG, which primarily backs life science companies focused on human health therapeutics. ASTRA is its second foray into animal health. MIG’s investment was split between MIG Fund 17, which closed on $186.2 million in early 2025, and MIG Fund 18, which is targeting up to $185.2 million and is projected to close in the first quarter of 2026.
ASTRA is now decoding all aspects of worm genetics in an effort to pinpoint “the right binding sites” on a molecule so that the treatment destroys the worm alone while leaving the animal healthy, says MIG’s Kastenbauer.
The company is targeting not only heartworm and similar parasites but also one-celled invasive organisms. One medication that ASTRA is developing targets coccidiosis in poultry, which would eliminate the protozoa causing the disease but leave the chickens unharmed, he says.
The animal parasiticides market is considerably larger and has more growth potential than the monoclonal antibodies market that Dechra Pharmaceuticals is targeting with its acquisition earlier this year of Invetrx, which has developed a pipeline of products to cure chronic diseases in dogs and cats, he notes.
“If the big four [animal pharma companies] are paying half a billion in US dollars for a company which has a nice pipeline in a segment which is not as large compared to parasiticides, that’s why we think [we were] smart to invest in parasiticides, which is a much larger market,” Kastenbauer says.
Parasite therapies are one of many market opportunities in animal health. The global animal healthcare market was valued at roughly $68.32 billion in 2025 and is projected to reach $112.33 billion by 2030, with a 10.5 percent compounded annual growth rate, according to Zoetis, which has an estimated 20 percent market share.
Improved diagnostic imaging
MIG first invested in animal health last year with Hawkcell, whose imaging software is making diagnostic analysis of animal diseases easier and more efficient. Until recently, all CT and MRI scanning machines were configured for human anatomy and required reconfiguration each time a vet wanted to scan an animal’s body.
“The CT and MRI scans configured for humans are much slower [to use for animals] because you have to reposition the dog or cat to find out what you are scanning,” says Kastenbauer. “With Hawkcell, you get much faster and cheaper images and the veterinary clinic knows right away what disease the animal has. That’s a good value proposition for vet clinics because they save time and can do more images and can charge more money.”
Veterinary diagnostic imaging, currently a $1.84 billion market, is expected to grow at a CAGR of 7.3 percent to $2.62 billion by 2030, Mordor Intelligence reported in July. Leading manufacturers of CT and MRI machines like Siemens and Canon have no interest in setting up franchises for animal health, says Kastenbauer. That gives Hawkcell lots of room to service vet clinics without having to worry about competition from large incumbents.
While Hawkcell’s imaging software already has many users across Asia, the US and Europe, the company continues to work on product development and is pushing for further market penetration, he adds. The €3 million of Series A venture funding led by MIG and the €2 million of debt financing provided by undisclosed investors last year will allow the company to scale up its business, including expansion in North America.
A key driver of Hawkcell’s expansion is Mars, which, in addition to its pet food business, is the world’s largest employer of veterinarians, with about 40,000 under contract. After buying vet clinic chains across the planet, Mars has an “urgent need for very good and efficient diagnostics,” Kastenbauer says. “That’s why Hawkcell fits perfectly well into Mars’ portfolio, so this also might be a nice exit channel.”
New cancer therapeutics
Borealis’s interest extends to companies developing cancer drugs for pets. “It’s a great opportunity and an unmet need,” Shaw says. “Six million dogs get diagnosed with cancer each year in the US, and there is not good access to cancer therapeutics.”
Borealis invested in FidoCure, an AI-enabled precision medicine platform for treating canine cancer via a $10.7 million Series A round in 2021, and Jenga Biosciences, a developer of veterinary cancer therapies via a funding round for an undisclosed amount in 2024. In addition, Shaw founded Blue Rabbit, whose pharmacy information management platform merged with Wedgewood Pharmacy in 2023, making it easier for over 70,000 veterinarians to quickly prescribe targeted therapies.
“As we develop cancer therapeutics, which have high cost and significant clinical studies and regulatory expense, we’re thinking very much about a global category and the opportunity to bring those new innovative treatments to market in the US, Europe and APAC, so that it justifies the level of investment that we’re putting in,” says Borealis’s Ferneau. “We probably would first seek USDA approval for those therapeutics, but we imagine it’s a global strategy.”
Exit prospects
While Mars Petcare is a potential acquirer for companies in Digitalis’s portfolio, Jacobs notes that his firm and its companion funds are set up to be independent of Mars, the sole LP in both of those funds.
“There’s certainly no steering of start-ups in any way,” he says. “Instead, we want start-ups and growth-stage companies we support to do the best thing for all of their stakeholders. And if ultimately they are acquired by Mars, great. If they’re acquired by another strategic in the space who can help accelerate their mission, that’s also great.”
Digitalis has seen at least five of its portfolio companies acquired in the past three years. They include PetMedix, a maker of veterinary antibody therapies, which was bought by Zoetis in 2023, and Scout Bio, a gene therapies start-up that Ceva Santé Animale purchased last year. “Those are great outcomes for those companies and those founders, and accelerants we hope for the missions they were on,” says Jacobs. “We want to find the right home if indeed M&A is the path that a founder decides to go down.”
While exits remain muted for VC-backed companies in general, Jacobs sees “a robust ecosystem of buyers” interested in consumer packaged goods, veterinary services and diagnostics.
“They’re always in the market and tracking innovation that’s happening outside their four walls,” he notes. “Pet care is a relatively non-cyclical industry and the humanization trend has been going on for decades.
“So many of these existing pet-care incumbents want to participate in the next wave of innovation, and some companies who are not today in pet care want to enter pet care by acquiring a business to begin a foothold in this very stable and high-growth category. We see that as consistent across the last few years, and that’s what we see for the next few as well.”