Pet insurance start up Wagmo has raised $US12.5 million ($16.66 million) as it pursues the “wellness” segment of the pet market.

Christie Horvath, a former VP at Blackstone, launched Wagmo with Alison Foxworth in 2017, setting out to “reinvent the pet insurance industry”.

The duo say there is a market gap as most pet insurance providers cover the big emergencies, such as surgeries, while Wagmo also offers a “Wellness Program” which reimburses the cost of vaccinations, grooming, regular vet visits, tests and bloodwork.

Users pay a monthly sum and submit photos of their receipts in the Wagmo app which are quickly reconciled and the policyholder reimbursed.

Users can onboard to the platform and upgrade to an insurance plan later on. Wagmo has processed more than 30,000 claims using its proprietary technology, and over the past year averaged more than 20% monthly growth in new users.

The funding round was led by Revolution Ventures, with participation from Female Founders Fund, Clocktower Technology Ventures and Vestigo Ventures. Investors including Jeffrey Katzenberg, Jim Grube, Marilyn Hirsch, David Ronick, and Michael Akkerman also participated.

“We look forward to working with Christie, Ali, and the Wagmo team to empower pet owners to get the pet care they need for the everyday and the emergencies,” Revolution said.

There are 85 million pet owners in the US but less than 3% of pets are insured.

The Wagmo team plans to target its product to employer benefit employee packages at larger organisations.