Dope Dog is raising a Crowd SAFE at a $5 million valuation with 20% discount. This is a reasonable price, especially compared to many of the inflated valuations typical of early-stage consumer brands. The multiple from 2019 revenues of $175,092 to this valuation is certainly high. However, the company presumably grew during 2020, and it has built a strong portfolio of proprietary products and brand recognition. Therefore, Dope Dog’s price rating is relatively high. 

Roughly 48 million American households own a dog, and over $95 billion was spent on U.S. pets in 2019. Pet food and treats is the largest segment of this pet supply market, with supplies and over-the-counter (OTC) medicine coming in second place. The global pet care market is expected to expand at a CAGR of 4.9% through 2025. Of course, many pet owners are likely averse to or unfamiliar with giving CBD to their dogs. That means that Dope Dog’s addressable market size is significantly smaller than the total intersection between the pet treat and OTC medication markets. Assuming that a minority of the market is interested in CBD for dogs — plus the reality of several competitors in the pet CBD space — Dope Dog’s addressable market is likely closer to several hundred million. This is a relatively niche market, even assuming expansion into products for other pets. Hence, Dope Dog’s market rating is relatively low. 

Dope Dog was founded by a couple, Michael Benatar and Erin Mastopietro. Benatar, the company’s CEO, has 15+ years of experience in radio, film, and digital photography. In addition to various TV production and radio hosting positions, he has managed a freelance commercial photography studio for almost 10 years. Mastopietro has a sales background, with eight years of experience closing deals for Nordstrom and Premier IT, followed by other roles at a yoga studio and athletic wear company. 

Benatar and Mastopietro are clearly passionate about pet care and are dog owners themselves. However, the co-founders do not have significant business or startup experience and have not worked in the pet industry before. Therefore, Dope Dog’s team score is one of its lowest.

Pet CBD is an emerging space, but that means that Dope Dog faces many competitors. There are countless pet brands, large and small, selling CBD products — including treats, drops, peanut butter, creams, and much more. Dope Dogs emphasizes its use of natural, simple ingredients in its products, but a commitment to unprocessed ingredients is fairly standard for both human and pet CBD brands. It seems likely that consumers won’t view this as a true differentiator. Dope Dog’s other claimed differentiator — that the company has been featured in Forbes and Oprah Magazine — are significant achievements. However, the Oprah feature happened in October 2019 and does not seem to have caused a significant revenue spike for the business. For all of these reasons, Dope Dog’s differentiation score is its lowest across all five metrics.

Dope Dog’s year-over-year growth between 2018 and 2019 is one of its most positive signals. The company generated $67,000 in revenue in 2018, but more than doubled that revenue to hit $175,000 in 2019. Prospective investors should note, though, that financial data for 2020 hasn’t been shared yet. 

In addition, Dope Dog is running close to profitability. While the company posted a fairly significant net loss of $112,400 in 2018, its net income was $2,373. This performance data is particularly impressive given that Dope Dog’s founders have bootstrapped the business and have not spent meaningful capital on paid growth. Therefore, Dope Dog’s performance rating is its strongest.

CBD is a buzzy space for humans, and interest in the benefits of the hemp derivative carries over to the pet industry, too. It seems like a new pet CBD brand pops up every day, and it’s this competition that poses the biggest risk for Dope Dog. The company is well-branded and benefits from strong customer reviews, but these assets haven’t driven extraordinary revenue. Dope Dog is competing in a fragmented market. Currently, there are no strong signals that the company will emerge as a leader. While Dope Dog’s financial fundamentals are strong and revenue growth is positive, investors can’t be sure that the business will grow significantly larger than its current size, which would limit their return.

Dope Dog’s founders have built a well-branded, profitable business with no outside capital and no paid advertising. The company’s diverse line of products win rave reviews from customers, who in turn refer additional customers to begin long-term, lucrative subscription relationships with Dope Dog. The company has been growing steadily without outside capital to add gasoline to the fire. It’s possible that capital from this raise will power rapid growth as the company expands brand awareness through digital advertising.

Dope Dog customers rave about the company’s CBD dog treats, oil drops, and shampoos. The company posted strong year-over-year growth between 2018 and 2019, and even succeeded in turning a (small) profit last year. Dope Dog’s success is all the more impressive considering that the company has been bootstrapped up to this point, and that the vast majority of new customers come from referrals (not paid advertising). Dope Dog has strong business fundamentals. This new round of capital could be an inflection point for significant growth in the future. 

On the other hand, Dope Dog faces strong competition in the pet CBD space, and the company’s products are not particularly well-differentiated. The pet CBD space is rather niche to begin with, at least given the mainstream consumer’s current familiarity with and acceptance of CBD products, so Dope Dog is swimming with many other fish in a relatively small pond. Therefore, Dope Dog has been rated a Neutral Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Katy Dolan.