During the 2010s’ boom in on-demand services such as Uber and DoorDash, Wag staked a claim to the market for dog walking. It became a buzzy, high-flying company, at one point gaining a valuation of around $650 million, and grew to offer a whole range of tech products for pet care. But as the years passed, struggles mounted and profits remained elusive.
On July 21, Wag filed for bankruptcy.
To stay alive, the San Francisco-headquartered company is now using bankruptcy court to restructure in what’s known as a Chapter 11 process. Its lines of business — including gig-work dog walking and sitting, pet insurance, and the veterinary tool “Furscription” — will remain open, according to a news release. If a judge approves Wag’s restructuring plan, it will take the company off the public markets and into the private hands of a company called Retriever.
On the same day of the bankruptcy filing, Wag’s chief financial officer, Alec Davidian, submitted a document supporting and explaining the move. He wrote that Wag’s “monthly revenues declined rapidly after March 2020 as a result of the COVID-19 pandemic” and pointed to $69.5 million in losses from 2022 through 2024.
The losses weren’t Wag’s only problem. The company had taken out debt in 2022 when it went public, and in that loan agreement, it had set a minimum level of cash Wag would need to have on hand at all times. This year, Wag dropped below that amount, Davidian wrote.
Wag also failed to find a third-party deal to get more money, the CFO noted, and its debt obligations are set to mature in August, meaning the company was “facing a dire liquidity crisis.” So, Wag opted for the bankruptcy proceeding, in which it plans to eliminate the 2022 debt, which is currently held by Retriever.
“Through the Restructuring,” Davidian wrote, “[Wag] will emerge from these Chapter 11 Cases a stronger company, with a more sustainable capital structure that is better aligned with [Wag’s] present and future operating prospects.”
Wag did not immediately respond to SFGATE’s questions Monday.
The company’s bankruptcy filing and “dire” financial situation belie its once sky-high valuation. In 2017, just three years after its 2014 founding, Wag was pulling in tens of millions of dollars in investment and was securing promotion by giving “free walks for life” to celebrity fans like Mariah Carey and Kendall Jenner, Bloomberg reported. At the beginning of 2018, the SoftBank Vision Fund dumped a staggering $300 million into Wag, reportedly valuing the company at $650 million.
The investment didn’t go well. SoftBank, which grew infamous for high-dollar and ill-advised investments in Silicon Valley in the 2010s, ended up selling its stake in Wag back to the company in 2019. With competitor Rover growing fast, Wag’s new CEO slashed staff and moved its headquarters from Los Angeles to San Francisco. When the coronavirus pandemic began in 2020 and cut down customers’ demand for dog walkers, Wag launched into new business areas, as Business Insider reported.
But despite the more diversified business and massive existing market for pet care, Wag has never been able to recoup its former buzz. On Monday, the company’s stock traded for around 12 cents a share, for a valuation of less than $6 million.
Wag, once worth $650 million, files for bankruptcy
版主： 牛河梁
