Why Childcare Is VC’s Most Overlooked Investment

It used to be said that a child should be seen and not heard. In today’s working world, it can feel like it’s parents who are expected to keep quiet about their children. For founders juggling tight deadlines, packed diaries and travel commitments with family life, this silence can be particularly suffocating. For too long, the Venture Capital industry hasn’t stepped in to change the conversation.

Children aren’t a corporate scandal

Founders are always moving, always adapting, always ‘on.’ As an industry we often slip into a tunnel-vision mindset where anything that doesn’t directly relate to growth, innovation or profit is ‘unproductive.’ I’ve heard from founders who were afraid to approach investors with the news that they were expanding their family for fear of appearing selfish at best and, at worst, a liability with a question mark placed on their future. The tech and VC spaces haven’t been built to accommodate parents, particularly mothers, and founders have noticed.

Helene Guillaume Pabis, founder of Wild.AI, put it powerfully when she shared her terror in revealing to her professional network that she was pregnant, worried that investors would see it as a risk and conclude, “If I invest my money, and she takes time off, that’s a bad investment.”

It’s as if having a child was a kind of corporate scandal. In 2023, women-founded startups received less than 2% of VC funding invested across Europe and the US. Faced with that reality, the prospect of becoming a parent and willingly taking on the motherhood penalty (as this continues to be an issue which affects women more than men) can feel like a backwards career move. Even established leaders, like Marissa Mayer – the former CEO of Yahoo who famously took just two weeks of maternity leave after having twins – can’t escape the pressure to prove their commitment to their jobs.

Parenthood as an asset

Founders are people. And like many people, some want children. It’s a simple reality. Many will be surrounded by friends and relatives defining family on their own terms, with the freedom to make personal choices that reflect their values and needs. It’s not right to expect founders – both mothers and fathers – to sacrifice a fulfilling personal life for the sake of good business. Nor, if VCs truly care about ‘good business,’ would we want them to; parenthood can be as much an asset as any PhD or professional milestone.

Research suggests that becoming a parent can enhance empathy in both men and women. Studies are also increasingly challenging the belief that motherhood is a drain on creativity and career potential, with research showing that having children can actually complement creativity in mothers. On top of that, parenthood can build resilience and boost time management and problem solving skills. More generally, parents report having a greater sense of ‘life’s meaning’ after having children, which can fuel determination and resolve. These are all hugely important traits in a leader. VCs should roll out the red carpet for this kind of potential, not sweep it under the rug.

Childcare as a strategic investment

It was this understanding that led Ada Ventures to become the first VC in Europe to offer parent founders support towards the cost of childcare. We wanted to send a clear signal to founders in our portfolio: grow your life alongside your business. It’s not intended to replace regular childcare, but it’s an important safety net – one that recognises the unpredictability of a founder’s life.

Investing in childcare support for founders isn’t about making us feel good (although it does), and it’s not a quirky perk. It makes sense as a strategic investment in people with immense potential as they move through different phases of their lives. When childcare isn’t competing with business demands, founders are more productive, less stressed, and can devote more time to scaling their company.

We know that primary care responsibilities are the most important barrier to overcome for many female entrepreneurs in the UK. By encouraging more parents, especially women, to pursue their entrepreneurial ambitions without the constant worry of childcare, we can create a more diverse ecosystem.

These supportive policies can also be a powerful draw for top talent. Given the fear and anxiety surrounding parenthood in the startup world, it stands to reason that, say, a superstar female founder might feel more comfortable partnering with a firm that doesn’t just tolerate families, but actively champions them. This kind of support can also help to build future-proofed, long-lasting relationships; a founder might not have children when they start out on their entrepreneurial journey, but as they move through life, family-friendly policies could influence their trust in and loyalty to investors.

This issue, ironically, also applies for the investors backing these startups. WVC:E’s new report, Investing in Women: The Untold Stories of Mothers in VC, reveals that more than two thirds of women who are planning on having children (or more children) worry about returning to work in VC. This uncomfortably echoes the struggles faced by founders who need a network that understands the challenges of parenthood. VC firms have to embrace their parental support internally, too, if they want to uplift their own teams and enable founders and investors to thrive together.

Combatting shortfalls in government policy

Having infrastructure in place to support parent founders is all the more important given the wider childcare crisis in the UK. 50% of the childminding workforce has left the sector in the last 10 years, hundreds of nurseries have shut their doors, and nearly half of parents have been plunged into debt or withdrawn from their savings to cover escalating fees. Several year waiting lists are the new normal.

Successive governments have tried and failed to adequately address this crisis. When interventions are made, policies tend to focus on investing in the nursery model and overlook provision for wraparound care. This makes life even more difficult for anyone who doesn’t work a traditional 9-5 role, from nurses to tech founders. The scarcity of flexible options often leaves parents scrambling for last-minute care, which can come at a premium.

Ripple effect on company culture

With one in ten mothers leaving the workforce due to childcare challenges, VC-backed childcare initiatives have the potential to trigger a top-down cultural shift. I’ve heard first-hand from founders who have enhanced their own maternity policies and implemented similar childcare offerings within their startups after receiving support from VCs themselves. These founders feel empowered to make a difference, from a place of experience. Any feelings of guilt or insecurity around starting a family have been replaced by a desire to extend that support to others.

In the UK, an estimated £9.4b in potential earnings is lost from the UK’s GDP every year because mothers who want to work more hours are held back by childcare concerns. Likewise, in the US, Reshma Saujani, founder of Girls Who Code and Moms First, has argued that accessible childcare could drive even greater economic growth than advancements in AI.

We have a real opportunity to make the working world a more inclusive place and drive serious economic returns at the same time. But it has to start with embedding families into the investment strategy. Without that, we’re stunting our own growth.