UniteddogsThe Estonian based startup United Dogs and Cats (UDC) has closed a 480 000€ funding round. The investors in the round are the Estonian Development Fund, Ambient Sound Investments and a group of individuals led by Skype founders and Mr. Raivo Hein. UDC has previously closed a 180 000€ investment in April 2008 from ASI and continues on a strong growth track with the recent investment.

The growth has been good – they are the market leader in Italy, France, Spain, Lithuania and Estonia. At the moment they have some 200 000 users (or should we say pets?) and continue to grow with support for 16 languages. This of course is great news for a company in economic times like these, but this has also incited a big debate on TechCrunch if we’re going back to 2001 with investments into this sort of companies.

While I realise that 200 000 users is not a lot, being a market leader in many of the European countries is a big thing. One thing that many people don’t also realise is that pet owners spend a lot of money on their loved ones. This of course creates a very lucrative market to be in. Furthermore, while many human centric social networks focus on individuals and create their business around peoples own egos – basing your business on something very close to these individuals and their basic needs is totally different.

Let’s face it, many pet owners put a lot of money into their pets not because the pets need all the accessories etc, but because they want to “buy” their love and care for them. There’s a lot more money there than in promoting your own ego online. If UDC is able to monetise this business – it’s on a very cash flow friendly road to success.

What’s your take on the investment? Are we back to 2001 all again, or does the different business models validate the rationality behind the investment this time?