The world's largest pet food company is starting a $100 million venture fund

Key Points
  • Mars, the world's largest manufacturer of pet foods, is starting a venture fund to back pet-tech, products and services.
  • The new Companion Fund will be led by Whistle CEO and co-founder Ben Jacobs, who sold Whistle to Mars in 2016.

Mars, the candy and pet food maker, is pouring $100 million into a new venture fund that will back pet care products, tech and services exclusively.

Ben Jacobs will lead the new venture arm, which has a cute moniker -- the Companion Fund. For now, he will remain at the helm of Mars-owned Whistle while he manages the fund.

Jacobs joined Mars in 2016 when its petcare division acquired Whistle in a $117 million deal. Whistle makes GPS-based location and activity trackers for pets. Mars has made Whistle, often called a "Fitbit for pets," into a category leader.

However, Mars' petcare division is still better-known for (and sells more of) its pet foods, including Pedigree and Whiskas. Mars is also one of the largest employers of veterinarians via its Banfield Pet Hospitals and other animal health businesses.

Jacobs told CNBC that the fund will invest in a range of categories, not just pet tech start-ups. He expects Mars will be able to lend start-ups help with product development, marketing, manufacturing, distribution and science. "We want to be the go-to partner for any promising new venture in petcare, whether that's health, nutrition or anything else," he said.

Mars is the world's largest manufacturer of pet food, it's also big on digital marketing

Jacobs added, "Pets are part of your family now. They're on your bed, not just in the yard. So we're interested in companies that remove pain points for pet owners, and help them keep their pets healthy. We're asking: how do you remove barriers for dog walking, dog sitting and veterinary care? How do you diagnose a patient that has no voice, and find health issues before your pet experiences pain?"

Pet owners in the U.S. spent $69.4 billion keeping their companions fed, healthy and happy last year, according to estimates from the American Pet Products Association. Within pet food, spending on premium and niche food products is expected to rise in 2018, along with sales via e-commerce sites and apps, Jacobs said.

The new Companion Fund is structured as a standalone firm with Mars as its sole limited partner. It will take minority stakes in early-stage companies, typically investing as part of a $2 million to $5 million dollar seed or series A round, according to Mars Petcare Connected Solutions president, Leonid Sudakov.

Mars formed its fund after a number of blockbuster deals in the petcare category, including an $8 billion acquisition of natural pet food makers Blue Buffalo by General Mills, and a $300 million SoftBank Vision Fund investment in Wag -- an Uber-esque app that lets owners book dog walkers and get detailed reports on their walks.