Mom Founder And VCs Are Disrupting The Childcare Industry

Even before the pandemic, employers were concerned about attrition due to childcare responsibilities, especially among female talent. Providing childcare benefits is a critical way to combat this attrition.

Shadiah Sigala knew this firsthand. She is a cofounder of a fast-growing startup, HoneyBook, and was the first female employee to become pregnant. As head of HR, it was her responsibility to write the startup’s policy, not just for her but all employees.

She searched for firms that helped employers provide childcare to their employees. “The two biggest players in the industry were dinosaurs,” exclaimed Sigala. “They were considered the gold standard for the industry.”

Inspired by her need for daycare and her difficulty finding suitable solutions for the startup she worked for, Sigala left HoneyBook four years ago to address this gap as cofounder and CEO of Kinside. Its model is to connect three seemingly disparate stakeholders-employers, employees, and childcare providers-on an online marketplace.

The Skills And Passion For Meeting The Needs Of An Underserved Market

Sigala is a first-generation Mexican immigrant who grew up in a working-class neighborhood. Her mother was a single mother who had to work. In an environment where few kids in her community went to college, Sigala was able to go to one of the finest liberal arts colleges, Pomona College, and earn her Masters in Public Policy from the Harvard Kennedy School.

Kinside’s other cofounders are:

  • Abe Han, a lead engineer at HoneyBook and now CTO at Kinside.
  • Brittney Barrett a branding, digital marketing and growth expert who led business development at Honeybook, and ran digital marketing at OUAI Haircare. She is CMO.

Kinside is a marketplace where parents can find childcare providers in their neighborhood, within their budget, and, importantly, which have open spots. “Daycare and preschool are where most Americans get their childcare versus nannies,” said Sigala. “Most families cannot afford a nanny, so they go to group-based care, and that’s where we focus.” Kinside partners with over 10,000 vetted and curated childcare providers and 9,000 employers to create a closed network where employees of its employer-partners can find providers.

Kinside’s key differentiator is its ability to identify which childcare providers have open spots. Employers pay Kinside to provide this benefit to their employees, and some also subsidize the cost of childcare. “I think the industry is moving toward more employers subsidizing childcare,” said Sigala.

As an operational cofounder of HoneyBook, Sigala did not have experience raising funding, nor did she have a network of investor contacts. And, even if she had had them from HoneyBook, investors interested in productivity tools for solopreneurs would not have been interested in the childcare marketplace.

The Kinside team understood the milestones that investors want startups to achieve at each funding stage. “We are very intentional and methodical when raising capital,” said Sigala. “What were the experiments we would run to de-risk the startup [at a particular stage in our fundraising]?” They anticipated the objections investors would have and addressed them.

Childcare Is A Business Issue That Is Gaining Investors’ Attention

In 2018, the threesome went through the Y Combinator program. It’s a highly regarded technology startup accelerator. Using lean startup methodology to iterate, they started building the marketplace.

“Y Combinator opened up the doors to angels,” Sigala said. “YC’s unique advantage is connecting founders to angel investors en masse.”

Kinside raised $1.3 million in 2018 and $3 million in 2019. By January 2020, they were ready for parents to start shopping in the marketplace. “We all know what happened three months later,” said Sigala. Working mothers lucky enough to work from home had the additional responsibility of caring for their children and overseeing online education. Most childcare providers shut down.

Timing is everything. “[Fortunately,] we had the runway [funding raised in 2019] for the next two to three years,” said Sigala. While the need for childcare was temporarily frozen, the Kinside team focused on developing the employer network and product. The team knew that whether employees worked remotely or in real life (IRL), the first thing that employees and employers would want as soon as it was available was childcare. Kinside would be ready.

Although there was still much uncertainty when the vaccine started to roll out in December 2020, employer contracts began to trickle in. Paying customers enabled Kinside to iterate in response to how they used the marketplace. By 2022, demand from employers and employees was coming back in full force.

“This enabled us to raise a $12 million Series A earlier this year,” said Sigala. The angels who invested in Kinside opened doors to other individual and institutional investors. While there was a lot of gender diversity among Kinside’s early-stage investors, there was not among venture capitalists.

Kinside’s Series A was led entirely by mothers: Joanna Drake of Magnify Ventures (who is on the board), Sasha McKenzie of Wellington Access Ventures, Alda Leu Dennis of Initialized, and Sara Deshpande of Maven Ventures. Magnify is dedicated to transforming life, work, and care for modern families. No surprise that it has attracted limited partners (LPs) such as Melinda Gates of Pivotal Ventures, who is focused on accelerating equality.

Sigala didn’t seek out a round of only mothers. Still, working mothers know how painfully inefficient the process of finding daycare is. With one exception-Charles Hudson of Precursor Ventures, a dad-”the only [institutional] investors willing to come to the table and write a check were mothers who have personally experienced how incredibly difficult finding childcare is and understand what a huge consumer and business opportunity it is to invest in this,” said Sigala.

Women-led venture funds are twice as likely to invest in startups with one female founder and more than three times more likely to invest in a female CEO. A hopeful sign of progress is that the percentage of women who were VC general partners (GPs) was almost three and a half percentage points higher in 2021 compared to 2019. Women made up 15.4% of VC GPs as of September 30, 2021.

What industries have you identified as needing disruption?

Originally published at https://www.forbes.com.

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Magnify Ventures

Magnify Ventures

Magnify Ventures is an early-stage venture capital fund investing in founders with bold ideas to reimagine life, work, and care for families.