The Japanese conglomerate SoftBank has invested billions in tech companies it believes have the potential to change the world, including the ride-hailing service Uber and the financial tech firm SoFi. Now it's getting into the dog-walking game.
Wag, the Los Angeles-based dog-walking start-up, received $300 million in funding from Softbank and hired a new chief executive, the two companies announced Tuesday.
Founded in 2015 by brothers Joshua and Jonathan Viner, Wag has quickly grown to more than 100 cities in the U.S. The company's app allows dog owners to schedule on-demand dog walkers and receive live photos and videos of their pets. Wag also has a mobile grooming van, which offers one-hour-long washes and before and after photos.
The company previously raised $68 million from backers including Battery Ventures and General Catalyst.
Hilary Schneider, former head of LifeLock, an identity theft protection company, will take over Joshua Viner's role as chief executive. Jeffrey Housenbold, SoftBank's Vision Fund managing partner, and Ted Fike, a senior investor at Softbank, will also join Wag's board of directors. Wag's founders will remain on the board and continue to oversee teams responsible for product, digital marketing, growth and technology.
The deal is the latest in Softbank's plan to have a hand in technological innovations in every industry — telecommunications, finance, media, e-commerce and transportation — that could shape the economy in the next few years, decades or even centuries.
Softbank is best known as a telecommunications company and internet service provider, but under the leadership of Chief Executive Masayoshi Son, Softbank has become an aggressive investor.
It bought Sprint for $20 billion in 2013, and it was an early investor in Yahoo and Alibaba — a bet that gave the company the war chest it has used to become a global tech investing powerhouse. Softbank has invested $4.4 billion in WeWork, a commercial real estate start-up, and $250 million in Slack, a workplace messaging start-up. It also has backed ride-hailing companies in Asia and the U.S., many of which are rivals.
No other venture capital firm or company has funds close to Softbank's $100-billion Vision Fund for start-ups or is investing as ambitiously on a global level.
Wag's payout is a small slice of Softbank's Vision Fund, which invests in "entrepreneurs who are leveraging the latest technology to transform existing industries and create new ones," Housenbold said in a statement.
The deal's not all that unusual, said Sumit Agarwal, a professor at Georgetown's McDonough School of Business. The Japanese conglomerate is investing in companies that help it collect data on current or potential clients, he said.
"If you look at fintech companies, they are also in the business now of trying to go out and collect data from nontraditional sources about their customers," he said.
Citing unnamed sources, Recode said earlier this month the deal would give Softbank 45% ownership of the company and a valuation of $650 million.
Wag declined to comment on how it will use the new funding. But Agarwal said it will probably enable Wag to expand internationally.
Agarwal said he expects Wag will be a more strictly run operation under Softbank's supervision.
Last month, Wag accidentally leaked lock box codes of at least 50 users and addresses of at least 100 users on its website. The company said that a software glitch was to blame and that Wag reached out to those users.
Data security "was not being done correctly by Wag, possibly because they didn't have the funds for the right infrastructure," Agarwal said. "Now with Softbank, they will make sure the data, which is the most valuable information, is protected carefully."
The pet industry was estimated to be a $69-billion market in the U.S. and a $180-billion global market in 2017, and it's growing quickly. Joshua Viner told the Los Angeles Times in August he thought investors haven't paid enough attention to the pet tech industry.
"We look forward to enhancing our technology and service offerings to enable more people to keep their dogs happy and healthy," Schneider said in a statement.