Parents' go-to source for childcare services
The online platform connects parents with service providers and partners such as babysitters, sports coaches, tutors, music instructors and child development experts.
Dubai - Platform connects parents with babysitters, sports coaches, tutors, music instructors and child development experts
By Sanjiv Purushotham
Published: Mon 7 Jan 2019, 3:27 PM
Last updated: Tue 8 Jan 2019, 11:16 AM
HI-TRAC: The author's shorthand for Happiness Index, Infrastructure, Talent, Regulations, Access and Capital. The six pillars that make the UAE a great place for a startup. This week's article is about infrastructure and access.
An IBIS World report from as far back as 2010 estimated that the in the US alone, over $55 billion would be spent on "parental outsourcing". At an estimated compound aggregate growth rate (CAGR) of 3.5 per cent, the market is likely to be at the $75 billion level in 2019. Of which childcare itself is about 40 per cent of the market and other after-school or co-curricular activities make up the rest.
This is among the most attractive industries for investors. When these statistics are reinterpreted for high-growth population sets like the Middle East, the investment opportunity becomes very interesting. On the one hand, services are not as matured as in the more developed markets but on the other, the population growth rates are higher and inclination to spend on young ones is deeply ingrained.
Venturing into this market is another in5 hosted startup. in5 has been instrumental in accelerating entrepreneurship across a wide spectrum of business domains.
Describing their business, power duo Zeynep Guney and Banu Cetin Akca, co-founders of UrbanCircle, said: "As parents ourselves, our mission is to create a trusted go-to source for parents looking for support on their kids' care and development by enabling access to a pool of qualified and verified resources. Both of us come from the corporate world but we've also experienced being stay-at-home mothers. Based on our experience of both worlds, clearly, parenting is one of the biggest challenges to take on in life."
Delving into the operating model, Guney and Akca stated: "Our online platform is a one-stop-shop that connects parents with a wide range of service providers and partners such as babysitters, sports coaches, tutors, music instructors and child development experts. We cover a spectrum of six key categories: childcare, educational enrichment, sports, after-school activities, special needs and family well-being."
According to them, the market in the Middle East and even the broader global market is ripe for digitisation - finding quality care and development for children is still difficult because of disaggregation and a lack of standardisation. Their platform seeks to gather and consolidate a continuing stream of "mom-vetted" talented service providers in the six categories. Consequently, they enable their supply-side partners to deploy under-utilised assets and create efficiencies by expanding to access untapped customer segments. Plus, the potential to cross-sell services across the six categories.
The underlying concept i.e. the shared economy, is not new. Airbnb and others closer to home e.g. Careem and another in5 startup - mrUsta, have used this model.
When asked about their level of confidence in this venture taking off, Guney quipped: "We are both experienced corporate executives. I'm a seasoned corporate and investment banker and Banu is a senior strategy consultant with an engineering background. We both have degrees from top-notch schools in Turkey, UK and US. But above all, we are parents and we know the real pain points. We are the right team in the right market. We will succeed."
Akca added: "It takes a village to raise a child. That's true. But the key differentiator for any mother is to know which 'village' to raise the child in. We help with that choice."
Speaking about the numbers in the UAE, she estimated that there are about 2 million children in the 0-18 year age bracket. A market survey conducted by UrbanCircle with over 300 parents in Dubai indicates an average annual spend of over Dh25,000 per child on care and extracurricular development alone. Deriving from this, they believe that there is potential of a $1 billion-plus market to be tapped in the UAE alone. This market is currently underserved, mostly offline and highly unorganised.
The team shared some of their plans - UrbanCircle launched in December 2018 after more than 12 months of conceptualising, market research, partnership meetings and technical development. The aim is to reach 1,000 transactions within 2019 and 5,000 transactions and $1 million revenues by 2021. On reaching critical mass, they intend to create other revenue streams. On the anvil are relocation consultancy to incoming expatriates with children, membership subscriptions, featured priority listings, badges and lead fees. Plus, monetisation of aggregated data and insights. Leveraging the high expatriate presence in the UAE, they intend to expand into Saudi Arabia, Singapore and the UK once they've stabilised their model.
The writer is founding partner at Bridge DFS, a bespoke financial advisory firm (www.bridgeto.us). Views expressed are his own and do not reflect the newspaper's policy. He can be contacted at email@example.com