by Ron Levin, managing partner with Alumni Ventures, and author of “Higher Purpose Venture Capital“
For thousands of years, the home — the family farm — was the center of wealth production. Children were born and raised on the farm where their parents worked, often alongside members of their extended family and other members of the community. If a child was too young to lend a hand and needed care, her mother could take her to the fields or leave her with a trusted auntie or grandma.
The Industrial Revolution changed that. Beginning in the early 19th century, adults worked outside the home in factories. This wasn’t much of a problem because, as soon as they were able, the children were put to work in factories and mines, too. Especially in textile mills, children were hired along with their parents and were paid only a few dollars a week.
In the 20th century, this began to change. In 1938, Congress passed the Fair Labor Standards Act, prohibiting child labor. Society, businesses, and the courts began to view children as a special class of person and recognize that parents — especially mothers entering the workforce — needed government support for childcare.
In the 1960s and 1970s, direct federal support for childcare was limited to low-income families. Indirect support came through tax incentives for employer-sponsored childcare and reducing personal income taxes for families with childcare costs.
In the 1980s, the Reagan administration shifted the balance of federal childcare funding, cutting support for low-income families while increasing benefits for middle- and high-income families. Voluntary and for-profit childcare became a booming industry, much of which was beyond the reach of the families who needed it most.
Today, the American childcare system remains divided along these same class lines.
Can this for-profit industry solve its own problems? Two childcare companies are proving that disrupting childcare is not only possible but also an opportunity worth investing in.
Kinside
Kinside operates a dual-sided childcare platform designed to connect working parents with current openings at daycares and preschools nationwide.
As a young mom, Kinside CEO Shadiah Sigala saw families’ acute need for childcare access. “The U.S. is the only industrialized nation that doesn’t guarantee childcare access to all,” Sigala shared. “I thought that there had to be a better way of solving the issue for parents and employers while also offering a seamless platform for childcare providers to serve their families.”
Kinside helps parents identify the most appropriate childcare provider based on parents’ individual preferences, proximity, price, and availability. They negotiate rates and enrollment fees with providers to help bring down childcare costs and offer the service to employers to foster family-friendly workplaces.
On the business side, Kinside gives childcare providers the chance to fill open slots in a timely manner, a boon for independent childcare providers and national childcare chains. The platform also offers a seamless backend integration, including payments and customer relationship management (CRM).
The results? To date, Kinside has enrolled over 13,000 childcare providers and thousands of employers across the country. More importantly, they’re helping parents save between 20% to 30% in childcare costs, which is a big deal considering the average annual spend on childcare is about $20,000 per child.
Mirza
Mirza is a fintech platform helping working parents and employers by providing family and financial planning resources. Mirza’s tools integrate money management, forgivable childcare loans, employers’ policies for parental leave, fertility options, and modern parenting advice, all in one place.
As Siran Cao, one of Mirza’s mission-driven founders, explains:
I’m a first-generation immigrant from China. My mother was forced to give up her career once we moved to the U.S. After my father left, I saw firsthand both the long-term financial impact on the family of trying to get by on limited income and the toll of the trade-offs on my mother’s identity.
I now see this issue as a caregiver myself and how common this experience is; Mel [Faxton] and I set out to eliminate that trade-off between paid work and caregiving.
Mirza is unique in that it allows employers to provide no-interest, forgivable childcare loans to employees with terms that are tied to employee goals—a win-win for everyone.
Mirza is launching with a major retailer and piloting with organizations that range from manufacturers to school systems. In the future, the company plans to expand to help families with costs for after-school care, camps, elder care, and more.
Looking Forward
Childcare, particularly full-day care, confounds parents across the socioeconomic spectrum. How did our country get into this position, where kids can go to school during the day beginning at age five, but for the first five years of life, parents are left to their own devices to figure everything out?
Early-stage companies like Kinside and Mirza are working hard to disrupt this vexing issue. We’ll need more groundbreaking innovation in this space as long as the government, with its inaction, continues to fail working families in this regard.
Ron Levin is a socially conscious venture capitalist, entrepreneur, and amplifier of inspiring enterprises. He’s a managing partner with Alumni Ventures, the most active VC firm in the U.S., and has been an angel investor and advisor to over a dozen startups. His new book, “Higher Purpose Venture Capital“, profiles 50 venture-backed startups that are solving the world’s biggest problems. Learn more at HigherPurposeVC.com.
