When Vanessa Larco, partner at New Enterprise Associates, a Menlo, California-based venture firm, returned to work last July after having her first baby, she was thrilled. “I love my job,” says the 33-year-old. “When I returned I felt welcomed and wanted.” Her first weeks went smoothly until she had to take her first business trip to Los Angeles. When her meetings ended earlier than expected, she rushed to LAX hoping to catch an earlier flight and be home for her newborn’s bedtime, a daily but important ritual between parent and baby. But by the time she reached the ticket agent, the flight was completely booked.
“I’m not a crier, but I broke down hysterically,” she says. “I never saw it coming.”
The episode taught her that even working mothers who seem to “have it all”—an accommodating employer, a lucrative career and a contributing spouse—are in dire need of more support. Larco, who normally invests in enterprise SaaS and fintech, began to explore digital health startups focused on the entire arc of early motherhood, from preconception to the “fourth trimester,” or the first three months of a newborn’s life.
Last month, Larco led NEA’S $27.5 million Series B round in Cleo, a parental benefits app that partners with employers. (The app connects working parents with experts on everything from LGBTQ family planning to sleep-training and lactation consultants.) And this is just NEA’s most recent stake in the startup ecosystem targeting new parents; the $20 billion firm—which has backed Groupon, Jet.com and Salesforce—led a $20 million Series C for caregiving site Care.com in 2010, and has participated in funding rounds for Willow (a wireless breast pump), Maisonette (a luxury retail marketplace for baby clothing) and Yumi (a baby food delivery startup).
“Women are choosing to go back to work and want both lives,” Larco says, “and we can fund the companies making it easier on women. It’s a huge opportunity.”
She’s not the only one who thinks so. Over the past six years, investors across the country have poured $500 million into companies playing in what can be thought of as “the new mom economy” — all the apps, gadgets, products and services targeting first-time Millennial parents with a child under the age of one. Forbes estimates the market size of this “new mom economy” stands at $46 billion today, a fraction of the $2.4 trillion spending power that American mothers control but a number that is, nonetheless, sure to grow as more Millennial women become mothers each year. (One million more per year, in fact.)
“Capturing the mom at the point of starting a family is incredibly powerful,” says Anu Duggal, partner at Female Founders Fund. Duggal notes that it’s at this point in a parent’s life that habits are being formed, so capture them once and a brand has them forever.
“This is a massive market opportunity that has been overlooked by the venture capital community,” she adds. Or, at least, overlooked by many of the men of Silicon Valley. The Female Founders Fund has invested in six women-led companies that support new moms, including Peanut (a Tinder for mothers with 650,000 members) and Primary (a direct-to-consumer children’s clothing brand that has $27.8 million in funding).
So what exactly are Millennial moms asking for that Gen Xers and Boomers did not? Wireless breast pumps and organic baby food delivery is just a start; innovators playing in this space have developed everything from robotic bassinets to the infant version of StitchFix. Here’s a look at how it all breaks down:
Your Guide To The New Mom Economy: The Startups Disrupting Parenthood As We Know It
Here are some of the leading companies aiming to improve motherhood. Initially, gadget startups like 4moms, Hatchbaby, Owlet and Snoo were the first to gain investor interest. The space has since expanded to digital wellness, community apps and more. As of Mother’s Day 2019, these startups have attracted $500 million in VC.
Now, just because Millennials want to enter parenthood with as many apps as they used to find their partners doesn’t mean Silicon Valley was (or even entirely is now) on board. Shannon Spanhake, one of Cleo’s cofounders, says VCs weren’t initially convinced until female executives from Slack and Reddit as well as one particular high-profile investor came on board and helped her gain some street credibility on Sand Hill Road: former Yahoo chief Marissa Mayer.
“Marissa has experience as a mom and a CEO who sees both sides of the challenge for working moms and employers,” says Spanhake. Mayer is also investing in The Wonder, a brick-and-mortar experiential center that engages both parents and children.
Who’s Backing The Baby Startups?
For all the X chromosomes dominating the investment landscape in this part of the world, there are some brave (and arguably savvy) men who are waking up to the opportunity here. Jeff Immelt, former CEO of GE, has also invested in Cleo. Motherly’s lead investor is BeCurious Partners, a firm whose portfolio is entirely on parenting tech and happens to be led by four men. And two years ago, Black Jays Investment, an investment firm led by Amit Sharma and Brian Muller, was the sole seed investor in Hatch Collection, a maker of chic staples a woman can wear before, during and after pregnancy. “It simply fit our investment thesis of backing D2C companies that are exploiting a market where there is no clear winner,” says Muller.
Nor do you have to be a parent to innovate in this space. Spanhake says for now, Cleo has been her only baby. “I know these startups are often started by a new parent but for me this is about supporting families and women who are facing a career cliff,” she says.
It’s a noble goal, but ultimately, the majority of startups in this ecosystem are still in their own infancy; their success is relatively unproven, and the $500 million invested in the new mom economy is just a fraction of what these companies need in order to scale. Preventing women from falling off that cliff will require a dual effort from founders like Spanhake and investors like Muller, Duggal and Larco. After all: It takes a village.