Dogster digs up $1M

Web 2.0 is going to the dogs.

Exhibit A: Dogster, a light-hearted website launched in January 2004 that once eschewed venture capital has raised $1 million from a consortium of angels, PE Week has learned.

The investors include Jean-Francois “Jeff” Clavier, founder and managing partner of SoftTech VC, a Palo Alto, Calif.-based firm that consults and makes angel investments in consumer Internet startups. Clavier told PE Week that Dogster “turned down a lot of offers” of VC before it accepted the angel money.

Investor interest in Web 2.0 companies apparently caused Dogster to change its mind about accepting venture capital.

Back in April 2004, Ted Rheingold, Dogster’s self-titled Top Dog, told PE Week sister publication Venture Capital Journal that he wasn’t interested in VC because he wanted Dogster to “maintain its whimsy.” He went on to say: “The minute fun is no longer the driving factor behind what happens to Dogster, the users will recognize that and slowly move away. The minute Petco wants to sponsor the site and have input on what content goes where, there goes the whimsy. The same is the case when VC comes in.”

But Rheingold made those comments not long after the Web 1.0 bubble burst. Now that there’s real money to be made, Dogster is more than happy to take VC—and advertising. The website is sponsored by VPI Pet Insurance and dog food maker Dad’s Pet Care and it hosts Google ads.

The Dogster website makes the following plea to advertisers: “Dogster and Catster are fun sites with a serious mission to celebrate fluffy love. Dogster is serving over 9 million pages a month on average and Catster is serving over 4 million pages a month. We offer good advertising opportunities for good companies.”

Clavier made a case on his blog for why Dogster could be a good investment back in September 2005:http://blog.softtechvc.com/2005/09/web_20_companie.html

Clavier’s post reads in part:

“On his blog, Ted [Rheingold] shares a few insights:

Yes, you read that right, Dogster & Catster are profitable. August exenses included three full-time salaries, roughly 80 hours of contractual services, 7 rented servers, our Potrero Hill office, a party and a bunch of they-sure-do-add-up-don’t-they expenses. However, we offset that and then some thanks to higher than expected revenues for site sponsorship, CPM advertisers, boutique advertisers, bulk advertising, paid user subscriptions as well as our revenue from store sales and pet-friendly travel bookings. The fact that Nintendo and ASPCA just committed to sponsor-level support and others are in final negotaition really helps me feel that it’s no longer crazy to think it’s so crazy it just might work.”