Just when you thought the tech industry couldn’t expand any wider, millennial founders are finding ways to disrupt more categories.
Next up? Parenting.
Data shows funding for startups focusing on products and marketplaces geared toward parents of newborns and kids is on the rise. Over the past two years, these startups have made a splash with investors, generating over $300 million in funding.
“We’re seeing a ‘baby tech’ boom happening now, that three or four years ago wasn’t happening,” Siva Nattamai, founder CEO and of smart baby monitor Cocoon Cam, tells Crunchbase News.
The trend undoubtedly illustrates the hunger for innovative baby gear by tech-savvy millennials, with many beginning to transition to parenthood.
Cocoon Cam, whose flagship monitor is currently carried by Target and Babies R Us, has raised $5 million in venture funding since launching in 2016. Nattamai, a former Tesla engineer, was inspired to build the app-integrated Cocoon Cam when his daughter was born. Not satisfied with the traditional baby monitors on the market, Nattamai set out to build the AI-featuring Cocoon Cam to detect a baby’s vitals, including breathing. This spring the company’s third model, Clarity, will hit the market.
But it’s not just baby hardware like Cocoon Cam that are finding success fundraising. Digital platforms assisting with parenting have also taken off in recent years. Take for example: Tinyhood, an on-demand expert advice platform for parents covering topics like breastfeeding to sleeping schedules.
Co-founder and CTO Susan Blinn tells Crunchbase News that because today’s parents have so much information at their disposal, they’re more in-the-know than ever. This creates opportunity for platforms like Tinyhood to organize and present the volume of resources available for parents.
“Millennials expect everything at their fingertips, and it’s only natural that they would seek the same level of convenience as they enter the world of parenting,” Blinn said. She goes on to explain that Boston-based Tinyhood’s mission to provide experts’ solutions for moms and dads makes it marketable to “digitally native on-the-go parent.”
Investors in this category agree, given that Tinyhood raised $1.5 million in seed funding last year.
Preparing For The Future
Jeff Levinsohn, the co-founder and CEO of Galore, an app that allows parents book activities for their children, said “investor are realizing there is definitely a big market here.”
Levinsohn confirms that Galore raised $1.7 million a year ago, which helped them expand from iOS app to Android and web. The San Francisco-based company plans to expand to new markets beyond the Bay Area, which launched at the end of last year.
Similarly, products aimed to help new parents navigate through sticky future planning are also gaining traction.
Fabric, a life insurance provider for families, raised $2.5 million in a May 2016 seed round. Co-founder and CEO Adam Erlebacher naturally founded the Brooklyn-based startup after becoming a parent himself. The former COO of Simple Finance noticed a need to disrupt the life insurance policy market.
“We launched life insurance and a digital will that are accessible on parents’ phones,” he told Crunchbase News, noting that a large percentage of parents with kids under 18 don’t have guardian selected in case tragedy strikes.
While insurance agencies are notoriously known for attempts to sell vulnerable parents the most expensive plans, the Fabric mobile website’s ease of use has seen a surge in sign ups.
“Seventy percent of our customers bought a life insurance plan in the first 10 minutes of visiting the site,” Erlebacher said, with the rate growing steadily at 20 percent month-over-month.
Keeping Kids Fashionable
Even e-commerce retailers geared toward parents of young children are making a big splash in Silicon Valley.
Kidizen, a Minneapolis-based marketplace, is a parent-to-parent “Etsy for kids,” as CEO Dug Nichols puts it. The company, which raised $3.2 million in its Series A round last year, is focused on the resale aspect of market, which turns out is a major up and coming category in and of itself.
“We’re on the early curve of the macro trend of resale overall,” Nichols explained to Crunchbase News. Second-hand markets makes sense when it comes to kids apparel resale, considering how quickly children tend to outgrow clothing and shoes.
“The millennial mom grew up with Airbnb and Etsy, and is used to not ‘owning’ stuff,” Nichols goes on to say, which is why the resale model makes sense for the millennial parent market.
Rockets of Awesome, which raised a major Series A of $12.5 million in 2017, is another example of how curating innovative products for Parents to buy their kids pays off. The New York-based company launched about 18 months ago anticipates 3-times year over year growth this year.
“The customers care about the businesses they are purchasing from and want to feel like they’re investing themselves into something bigger than just buying merchandise,” Blumenthal tells Crunchbase News.Rachel Blumenthal, Rockets of Awesome’s founder and CEO, says innovation in the kids space is a long time coming.
She also agrees that the recent “baby tech boom” is likely driven by tech entrepreneurs getting older, having kids and recognizing opportunities in the market.
Baby Tech Likely A Trend That Will Continue
Jay Clouse, an organizer at the Startup Weekend conference, says the “baby tech” trend we’re seeing in this space could be due to several factors.
First: the ubiquity of smart devices like phones and tablets have opened up new opportunities for today’s parents to stay educated on trends and maintain a connection with their children. Hence why funding for this market’s digital platforms, e-tailers and IoT gadgets spiked in the past couple of years.
“As we see a rise in couples trying to maintain their place in the workforce while also raising children, they’ll be looking for ways to stay connected and augment their children’s education.”
And while products targeting parents and families aren’t completely new, Clouse notes. He cited chore-enforcer Choremonster as an example. They have not seen a huge growth segment until recently.
“The kids market isn’t particularly sexy or cool but it’s ripe for fresh ideas, better experiences and improved products,” Rocket of Awesome’s Blumenthal says of the current boom in parent-geared tech. “Today’s parents are the busiest of all consumers and are demanding someone make their lives easier for them.”