Introducing: ParentTech

Parenthood in the United States represents more than a $1 trillion market.

The dominant spending categories are for essentials: food, transportation, education, healthcare (reproductive, maternal, pediatric, adolescent…), and clothing. Even beyond these categories, parenthood is vast: from nursery gear, to coordination tools, to entertainment. Mattel, Disney, and Pampers are billion dollar brands for a reason.

We tallied up what comes directly out of parents’ pockets to arrive at this figure, so it does not include government spending on things like public schools and social services, or employer spending on benefits like health insurance. Nor does it value unpaid work parents perform, or reflect the opportunity cost of the years of lost earnings when a parent drops out of the labor force. If these were factored in, the market size more than doubles.

And yet, until recently, parenthood technology — or ParentTech — was unrecognized in the startup landscape, existing on the fringes of more visible verticals like Digital Health, EdTech (traditionally oriented around services for schools, not families), and FinTech.

As we have seen with the rise of FemTech, there is tremendous value in exploring ParentTech holistically. Innovation in this sector benefits parents and children, from better health outcomes, greater financial literacy, smoother caregiver coordination, improved nutrition, and more affordable childcare. Parents aren’t seeking more “stuff”, but a better suite of tools and services, at an accessible price. ParentTech also pays dividends to employers that retain a portion of the 23% of parents who consider quitting because of childcare concerns; to the government via $21 billion in income and sales tax generated by working parents; and to specialist investors who may be more likely than purely generalist investors to select the best deals and founders in their sector. Innovation flourishes when teams addressing similar challenges can find one another to share learnings or partner - and when investors can identify patterns, assess market potential and evaluate the competitive landscape.

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Three tailwinds have made the challenges of parenthood more visible, prompting entrepreneurs, many of whom are parents themselves, to take action.

1. Demographic trends, like women choosing to delay childbearing and a general desire for smaller families, are changing the nature of parenthood in the U.S. The median age for giving birth in the U.S. hit 30 in 2022 and the average family size is around three people, down from four in 1960. Advancements in contraception and reproductive health, a focus on education and career, and financial insecurity partly explain these trends. Now, more than ever, parents are under pressure to care for children and alongside supporting their own aging parents: known as the ‘sandwich generation’ effect. But parents further along in their careers do tend to have more resources to spend per child, to access the support that they need.
2. The evolution of social and cultural expectations around parenthood: What used to be deemed a ‘women’s issue’ is now everyone’s issue. Our society is redefining gender roles and what constitutes a family, which has shed light on caregivers other than the birth mother and on previously unacknowledged topics like male infertility, LGBTQ-inclusive services, special needs and neurodiversity, and the unequal division of household labor. Fathers and non-traditional families have always been in the picture, but now they are more likely to talk about their own challenges of becoming and being a parent, and expect their (and their children’s) needs to be served too. Underpinning this tailwind is technology that has made our lives more interconnected and encouraged more open dialogue around personal stories.
3. The coronavirus pandemic: Quarantine blurred the lines between work and home and made historically ‘invisible’ work like childcare more visible. Parents faced acute challenges in caring for their children during lockdown. Many childcare centers simply closed during the pandemic and one in ten childcare jobs disappeared. Now, 50% of American families live in a childcare desert. The pandemic’s impact on working mothers, schools, and childcare centers gave way to an entirely new cohort of entrepreneurs determined to make parenting easier. The pandemic also brought mainstream adoption of virtual tools which made it easier to launch a startup and fundraise from anywhere, unlocking the potential of a broader demographic of entrepreneurs.

There are multiple investor hotspots emerging as investors wake up to to the opportunity:

Reproductive Health: Reproductive health in the U.S. is an $8 billion dollar market and growing. Demand for services is growing as the fertility rate falls, due in part to women having children later in life. Startups like GoStork are supporting families of all forms, and Kindbody are leading the charge to get employers to offer fertility benefits. Kindbody raised $100M in March 2023. Beyond healthcare, fintech startups like Sunfish are helping intended parents afford the treatments they might need to start a family.

Maternal Health & Wellness: Invigorated by the spotlight on FemTech, greater numbers of female founders are building to serve unmet needs related to pregnancy, postpartum, pelvic health, breastfeeding, and maternal mental health. This includes breaking taboos and biases around historically ignored issues, and curating to a broader range of cultural needs. Seven Starling offers online care for maternal mental health and raised $1.55M in March 2023. Origin provides physical therapy services to the millions of women who face overlooked pelvic floor issues related to pregnancy and postpartum.

Niche is no longer niche: Beyond unmet (and previously often unmentioned) maternal health needs, there are an increasing number of tools tailored for parenting through otherisolating events, such as a medical diagnosis, chronic conditions, divorce, and foster care. While a family might feel alone navigating these challenges, when considered in unison across the United States, there are millions of others sharing their journey, which founders — often inspired by personal experience — are stepping in to serve. The expense tracking mobile app Onward helps co-parents communicate about shared finances, closing ($9.7m in funding in October 2022. Little Otter and Elemy (a ParentTech unicorn) — both offer wraparound support for families and kids with mental health needs and in-home therapy needs, respectively.

Childcare: There are many facets of the enormous $136 billion dollar childcare industry that are ripe for innovation, with more than half of Americans spending over 20% of their wallet on childcare. Motivated parents, founders, and childcare providers are rapidly adopting technologies to make childcare more accessible and affordable. Kinside created a dual-sided platform to match working parents with daycares across the country and raised $12 million in 2022. Mirza is addressing the two million parents who leave the workforce or cut hours each year because of childcare issues by helping employers distribute caregiving subsidies to working parents. Increasingly, the federal government is recognizing the intricate relationship between workforce development and childcare. Earlier this year, the Biden Administration introduced a new requirement that semiconductor chip manufacturers that receive federal funding provide childcare to their workers. It is hoped this initiative will extend more broadly in the coming years.

Digital Solutions: New parents — 90% of whom are millennials — overwhelmingly rely on online sources and digital solutions. For guidance on parenting they turn to sources like Emily Oster and Dr Becky. They seek smart devices, especially in the realm of sleep and health, addressed by tools including the Snoo smart bassinet and Hatch lights.

Digital tools for other parenting needs besides health have proliferated. In the era of remote engagement, Caribu lets families connect over a virtual library of books and activities — the company was acquired by Mattel in late 2022. Bark Technologies gives parents tools to ensure online safety and manage screen time, and Blueberry Pediatrics grants 24/7 access to remote medical support — because as parent readers know, things always seem to happen at night and on weekends. FinTech meets parenting with multiple financial literacy and safe banking apps like Copper and Greenlight which teach children how to make smart financial decisions.

Outsourcing: Technology is also making it easier for parents to balance time they spend on parenting versus other responsibilities. Because families are starting later and grandparents are older and may live far away from their children and grandchildren, parents rely ever more on outsourced paid help. Prioritization of self-care is also normalizing a desire to reduce time spent on care tasks which do not directly involve engagement with our children. Technology that outsources time-consuming tasks like cooking, driving, and maintaining a home, are helping parents allocate their time better - which is important when the value of time parents spend on children exceeds the direct cash expenditures on them. There are numerous startups supporting parents’ desire to outsource time-intensive activities. Examples include Little Spoon, which offers ready-made meals, Zum, which offers ridesharing for kids, and Strongsuit which offers household organization tools.

Development and Enrichment: Parents got an inside view of the classroom during the coronavirus pandemic, which, coupled with greater recognition of neurodiversity and the benefits of early interventions, has driven demand for multiple modes of learning for children - from educational games to adaptive tutoring. BEGiN, which owns multiple personalized learning and tutoring brands like Homer and Kidpass Tutors, raised $94 million in late stage venture capital in early 2023.

Beyond formal learning, startups have benefited from parental demand to find clubs and classes: Outschool reached unicorn status with its online class offering, and Sawyer closed a Series A for its search tool for activities in families’ local area. In the realm of developmental toys, Lovevery is a subscription-based startup that saw skyrocketing demand during the pandemic. The Boise-based company is likely gearing up for an IPO in the coming years. Entertainment and social media can be a challenging realm for families, with children often seeking access to platforms historically designed for adults. Zigazoo is an example of a teacher-designed alternative, for families in search of a safer option. Important conversations are underway at the national level around privacy, data security and collection, and safeguards for younger users, with much room for entrepreneurs to support.

Intentional Lifestyles: Consumer interest in accessing products that are more holistically friendly to the Earth or our bodies are unlocking a Pandora’s box of new consumer goods targeted towards conscientious parents. Tiny Health offers microbiome test kits to bring insights into the link between gut biota and kids’ health. Kudos Diapers, which took home $250,000 on Shark Tank in January 2023, offers more sustainable disposable diapers. Primary is a gender neutral kids clothing company bucking the stale ‘blue or pink’ choice in kids’ apparel.

“Next level” technology: Many of the startups mentioned so far are digitally-native or technology-enabled versions of what has existed before, but there is a cohort of next generation startups using technology to revolutionize aspects of parenting previously unserved. Powered by GPT-4, Milo is the AI “co-pilot” for parents, aiming to insert order into family chaos. Maple is a platform that facilitates interaction between caregivers or search for providers for household and parenting tasks. Taking things truly to the next level, Harmony is developing an infant formula containing lab-created human breast milk proteins, to offer better options for families facing cow’s milk protein allergy.

ParentTech encompasses real opportunities for investors and, more importantly, tangible, consequential support for families raising children. The sector is seeing a new generation of founders and their angel and institutional investors who recognize that parenting involves endless twists and turns, and that leveraging technology can make the journey easier and more enjoyable. 2021 was a record year for investments in ParentTech startups, with $1.4 billion in deals, and we are excited for all there is to come.

[Parenthood Ventures is a platform for startups serving parents and children, and for investors interested in learning about their fundraises. To date we have welcomed founders from more than 500 startups into our ecosystem, addressing families’ needs from Reproductive Healthcare through to navigating the teen years, with concepts spanning from fintech to CPG; from entertainment to healthcare. Follow us on LinkedIn for the latest ParentTech news, or join us, as a founder, investor or parent member].