Mums the word: investing in the baby care & parenting sector

As a new mum and a VC investor I now have experience investing in a new human as well as newly created businesses. Both occupations require copious amounts of research — although sometimes I’m not sure which one requires more! Given that motherhood has provided me with a new experience and perspective as a parent, I thought it fitting to combine both parts of my life in my first ever blog. So, here’s a quick dive into the parenting and baby care investment sector.

There’s a lot of tech out there that tries to help new parents make sense of what is a dramatic change in their lives; I began my journey by downloading an app called Bump (actually a few weeks earlier with a pregnancy test but there was nothing innovative in that tech). It offers a week-by-week overview of your baby’s development and the changes your body is experiencing as you go through pregnancy. Amidst the flurry of opinions, frantic working days, and pulling in various directions, I found myself retreating to Bump’s relatively simple and engaging diagrams of foetal development more often than I was engaging with people on the same subjects. Bump was not a perfect, but reassuring pregnancy companion (later on, as I was researching this space, I found a few that are even better, Baby2Body really stood out for example).

Inevitably stressful for us new parents; the parenting and baby care space is also very exciting and dynamic. It is rapidly evolving as technology provides new solutions to the age-old challenges of starting a family. In 2017 alone, startups in the sector in North America and Europe raised more than $214m in early funding (it’s unbelievable how much parents are willing to spend on their babies), forcing more established names to innovate to remain competitive. It is also a diverse ecosystem, with sub-sectors including apparel, educational products, baby monitoring and digital learning to name but a few.

In my role leading the early stage investment arm at True, we see over 2,000 young businesses a year. Researching the parenting and baby care sector while simultaneously being absorbed at a personal level has given me a unique perspective on some of the key themes and areas, and those that offer keen potential: social networks for parents and babysitting applications.

Monetising Members

Social networking is an increasingly important part of raising kids, particularly for new mothers — one survey suggested they spend as much as 8 hours on the internet per day in the UK. The largest share of those 8 hours is spent on smartphones, during the rare and short breaks you get while the little one is asleep, or at least content. Time spent possibly looking for answers when worrying or confused about new — and daunting — parental tasks. A quote from the American journalist Susan Maushart summarises this state perfectly: “The first of many strange paradoxes of human motherhood is that mothering is the most powerful of all biological capacities, and among the most disempowering of all social experiences.”

Parent-focused networking sites and apps, channels that did not exist until quite recently, are perfectly placed to provide vital support, community and advice. This change has largely been driven by the verticalisation of social media, lowering the barriers for parents to connect and ensuring that content discovery remains focused and relevant. A trend within the broader social network sector is that some people are wanting to keep some aspects of their lives more private than other parts and instead will engage with a more focused audience for these more guarded areas of their lives. This has been a key driver for continued growth of social networking for parents.

Netmums and Mumsnet, both founded in 2000, were the market pioneers for this sub-sector, but have since been joined by a host of other websites and apps offering ways to connect with fellow parents. The natural progression to monetising the user-base for each of these platforms is challenging — Facebook itself went through a few iterations in attempts to find the right formula for several years. This challenge is made harder by the specificity of the focal communities. The optimum business model varies depending on whether the network is web or app-based, given the differences in data collection and receptivity to branded content. Monetisation requires careful and well-curated content management and powerful back-end infrastructure to analyse and streamline user data. On the other hand, for mobile apps, increased e-commerce integrations may allow such networks to remain relevant and continue to grow.

Aiming for Uber Convenience

Together with the demands of parenting, comes the need for babysitters. This sub-sector represents a huge £1.5bn industry in the UK alone. The popularity of online sitters continues to grow, linked with a rise in the number of parents working full-time and the expanding familiarity of users with online vetted service providers. The emotional value of safe, accredited and credible-looking babysitter services is gigantic.

Babysitters themselves say this method of service is preferable given the flexible schedule and safe working environment it provides. The market is somewhat crowded, and can be sorted into on-demand (Bubble) and subscription (UrbanSitter) marketplaces; web-based (Sitters) and app-based (Babysits) listing platforms; as well as own fleet models, such as KoruKids. The Uber-model for services has had an effect even on an area as sensitive as babysitting. An on-demand app that allows parents to browse the babysitter’s profile and pricing, hire them instantly and has proper trust and safety functionality, has become the preferred choice for many families over agencies or simple listing platforms. Personally, I still need a bit of conviction to use them, because ironically, I can entrust my own life to an Uber-driver, but much harder for me to entrust my baby to Uber-nanny.

Trust Wins Out

Analysis of the social network scene for parents highlights the importance of a strategic approach to monetising the user base, one that reflects the nature of the platform. Meanwhile, for the babysitting sub-sector, the growing popularity of Uber-like apps among parents can’t be ignored.

As a new working mum, I know the value of these lifesaving services; as a VC I’m just as excited by the numbers behind them. I also became acutely aware of various vulnerabilities motherhood comes with, and how sympathetic sites and apps can help. Those startups that are able to strategically and authentically monetise that intrinsic emotional value are the ones that look like winners in this market. Most parents are (and I am no exception) striving to produce a child who will become a resilient, outward-looking adult — and startup founders are like that too and I empathise. But when it comes to picking winners in this sector, it’s the genuinely trustworthy and credible platforms that will eventually turn into the serious players (outward-looking adults).