# Smalls Financial Model

Premium fresh/refrigerated cat food delivered on subscription, purpose-built for cats (not adapted from dog food).

- Canonical: https://finamodel.com/startups/smalls
- Excel download: https://finamodel.com/startup-models/smalls.xlsx
- Category: Health-tech
- Model type: Unit-economics / DTC
- Funding round: Series B
- Funding: $19M
- Founded: 2023
- Geography: US.
- Customer: B2C

## About the company

Smalls delivers premium fresh refrigerated cat food on subscription, formulated specifically for cats. The consumer brand sells recurring meal delivery rather than relying on retail distribution alone, making product quality and dependable cold-chain fulfilment essential to retention.

Customer economics depend on subscribers, boxes per month, ARPU, feeding plans, acquisition cost, and the perceived health and convenience benefits of a premium pet-food routine. Growth requires balancing direct-response marketing with production capacity, fulfilment reliability, and replenishment behaviour.

The model forecasts subscribers, boxes per month, ARPU, food and cold-chain cost, CAC, retention, and fulfilment. It includes packaging, shipping, inventory, customer support, gross margin by cohort, working capital, operating cash flow, cash burn, and runway.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

- Fresh, vet-formulated cat food delivered frozen to subscribers' doors every 4–6 weeks.
- 14 proteins and textures available to satisfy cats' need for nutritional variety (vs avg 3–5 SKUs in dog food).
- Formulation tested as more palatable than NomNomNow cat recipe in head-to-head lab test.
- Product developed via 3,903 supplier evaluations, 90 palatability studies, 16 formulations, 4 packaging styles.
- Onboarding via a quiz → personalised trial box → recurring subscription.
- Customer relationship philosophy: proactive support, 30-min SMS/email response times, lifecycle support.
- Strategic pivot underway: from "cat food brand" to "cat brand" - aiming to own the full cat care wallet.

## Market

- US Pet Food Market (all pets): $38B.
  - Dogs: $26B.
  - Cats: $11B.
- US Cat Care total (food + non-food): $30B.
  - Food: $11B.
  - Litter, Toys, Treats & Other Consumables: $9.4B.
  - Other Services: $11.9B.
- Premium pet food market growing strongly 2000–2020 (chart: ~$10B in 2000 to ~$20B by 2020); mid-priced and economy segments roughly flat.
- Fresh/refrigerated cat food is the SAM; Smalls claims market leadership with no named direct cat competitor in this segment.

## Revenue model

- Primary: recurring subscription boxes shipped every 4–6 weeks direct-to-consumer.
- Recurring revenue as % of total revenue: 86%.
- Average Order Value (AOV): redacted ($XXX) in deck.
- Secondary (future): accessories, treats, toys, litter - attach rates shown but redacted. Plan to become full-category "cat brand".
- Channels: primarily online/DTC; deck mentions exploring omnichannel / retail expansion as use of funds.

## Traction & metrics

- Growth over last 6 months: 2x.
- Subscriber base 8x since Q1 2020 to Q4 2021.
- Annual Run Rate: redacted ($XXM ARR at Q1 2022).
- Revenue trajectory (Annual Run Rate, bar chart Q4 2019–Q4 2024E): all values redacted as $X.XM / $XX.XM - chart shows clear step-up growth from 2019 actuals through 2024E projections.
- Recurring revenue as % of total: 86%.
- CAC: redacted ($XX) at Q1 2022; quarterly CAC table (Q1 2020–Q4 2021) all redacted as "XX".
- AOV: redacted ($XXX).
- Revenue LTV: redacted ($XXX).
- 3yr RLTV: redacted ($XXX).
- 5yr RLTV: redacted ($XXX).
- Long-tail retention: 95% of customers at 2-year mark remain at 3-year mark.
- Production capacity increased 10x via new manufacturer.

## Unit economics

- CAC: redacted across all quarters shown; Q1 2022 "landed at $XX".
- Contribution profit per box: redacted (XX%).
- Revenue LTV: redacted ($XXX).
- RLTV (3yr): redacted ($XXX).
- RLTV (5yr): redacted ($XXX).
- Deck claims "XX% margins" in investment summary - likely contribution margin, value redacted.
- Treats historic attach rate: redacted (XX%).
- Toys attach rate: redacted (XX%).
- Payback period: not explicitly stated.

## Competition / moat

- Direct fresh/refrigerated cat food competitors: none named (Smalls claims to be sole player in this segment).
- Dog fresh food comparables (adjacent, not direct): The Farmer's Dog, JustFood, PetPlate, Ollie, NomNom.
- Moat sources claimed:
  - Proprietary, ultra-palatable formulation (head-to-head lab test vs NomNomNow).
  - 14 proteins/textures = breadth legacy brands cannot match.
  - Diversified, proprietary customer acquisition channel mix - less than 1/3 from any single paid channel.
  - High long-tail retention (95% at 2yr → 3yr) creates durable LTV advantage.
  - First-mover / brand in underserved fresh cat food segment.

## Team & funding ask / use of funds

- Team (slide 11):
  - Matt Michaelson - CEO (background: Thinx)
  - Teresa Galli - Merchandising (One Kings Lane, Paperless Post)
  - Justin Lewis - Supply Chain (Jet, Walmart)
  - Veronica del Rosario - Brand (Dame, Thinx)
  - Samantha Chen - Strategic Finance (Buffy, Kearney)
- Funding ask: $12.5M.
- Use of funds:
  1. Marketing & brand investment; omnichannel exploration.
  2. Product expansion beyond food (litter, treats, toys, accessories).
  3. Team build-out: R&D, Engineering, Retail specialists.
- Target outcome stated: "take the business to $XXM" - exact target redacted.

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## Recommended financial model

- **Archetype + why:** DTC subscription P&L with cohort-based LTV engine.
  Smalls is a subscription box business with 86% recurring revenue, strong cohort retention, and a clear CAC/LTV unit economic frame. The right model is a subscriber cohort waterfall driving revenue, combined with a contribution margin P&L. Secondary layer for accessory/non-food attach rates once the "cat brand" expansion begins. Not SaaS (no seat/license pricing), not a marketplace, not a 3-statement corporate model at this stage.

- **Forecast horizon & granularity:** Quarterly actuals from Q1 2019 to Q4 2021 (available from deck charts); quarterly forecast Q1 2022 through Q4 2024 (matches deck's projection period). 3-year horizon minimum; optionally extend to 5yr for LTV cohort tail.

- **Key drivers & assumptions:**

| Driver | Value |
| -- | -- |
| Starting active subscriber count (Q4 2021) | Redacted - derive from ARR ÷ AOV × 13 weeks |
| AOV (avg order value per box) | Redacted ($XXX) |
| Box shipment frequency | Every 4–6 weeks → ~8–10 orders/subscriber/year |
| Recurring revenue % | 86% of total |
| Monthly gross subscriber adds | back-calculate from 8x growth Q1 2020–Q4 2021 and post-raise growth plan |
| Monthly churn rate | ~2–3%/month implied by near-zero long-tail (95% 2yr→3yr); early-tenure churn likely higher, ~5–8%/month |
| CAC | Redacted; $80–$150 range typical for DTC subscription food; exact value to be confirmed |
| Contribution margin per box | Redacted (XX%); 30–40% range for premium fresh food DTC |
| New subscriber acquisition spend (post-raise) | majority of $12.5M deployed into marketing over 18–24 months |
| Attach rate - treats | Redacted (XX%) |
| Attach rate - toys | Redacted (XX%) |
| AOV uplift from accessories | 10–15% incremental per order once attach engine live |
| Production capacity | 10x increase unlocked - not a near-term constraint |
| Headcount / opex growth | scale with revenue; R&D and retail hires post-raise |

- **Scenarios (Base / Bull / Bear - which variables flex):**
  - **Base:** CAC holds at current levels, churn ~3%/month early-tenure, accessory attach rates ramp gradually over 12–18 months post-raise.
  - **Bull:** CAC declines as channel mix diversifies further, churn compresses, full accessories engine live by mid-2023 boosting RLTV.
  - **Bear:** CAC rises (competitive paid media), early churn spikes if trial-to-subscriber conversion weakens, accessories attach slower than modelled.

- **Required sheets / outputs:**
  1. **Assumptions** - all drivers with Base/Bull/Bear toggles.
  2. **Cohort Model** - monthly cohort waterfall: new subs added, churn applied, active subs by cohort, cumulative RLTV per cohort.
  3. **Revenue Build** - active subs × orders/year × AOV (food) + attach revenue (accessories).
  4. **Contribution P&L** - revenue → gross profit → contribution margin (after CAC, shipping, COGS) → contribution profit per box.
  5. **Opex & Cash Burn** - G&A, marketing spend, headcount, capex; runway vs. $12.5M raise.
  6. **KPI Summary** - ARR, active subs, CAC, LTV, LTV/CAC ratio, payback period, contribution margin %, monthly burn, runway.
  7. **Cohort Retention Chart** - visual cohort curves (mirrors slide 17).

## Frequently asked questions

### Is the Smalls financial model free?

Yes. The Smalls model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.