SAN FRANCISCO – Petopia.com is the latest Internet-based retailer of pet products to receive venture capital backing, raising $66 million in July for its second round of financing. Since March, venture firms have invested more than $125 million in the pet niche.
Corporate investor PETCO Animal Supplies Inc. of San Diego led the Series B round and has formed marketing and distribution partnerships with the on-line retailer. PETCO retained Morgan Stanley Dean Witter to review 12 Internet investment candidates and selected Petopia.com because of “its higher service-oriented applications and ability to offer a new channel of distribution,” said PETCO Chief Financial Officer James Myers. PETCO has a 20% equity stake in the company, with warrants that provide the opportunity for an increased ownership stake.
Groupe Arnault, the venture affiliate of LVMH Moet Hennessey Louis Vuitton (LVMH), also contributed to the round.
Petopia, which was incorporated in February, had previously raised $13 million from Technology Crossover Ventures. The venture firm elected not to participate in the second round, although General Partner Jay Hoag said TCV was directly involved in bringing LVMH – a limited partner in its fund – into the deal. The San Francisco-based company expects to launch its retail Web site before the end of July.