Andreessen Horowitz Leads $20 Million Investment in Wonderschool, an...


Andreessen Horowitz Leads $20 Million Investment in Wonderschool, an ‘Airbnb for Preschool’

By Tony Wan     Aug 10, 2018

Andreessen Horowitz Leads $20 Million Investment in Wonderschool, an ‘Airbnb for Preschool’

Early-childhood education is critical to helping children establish a strong foundation for growth. But a shortage of providers has created what the Center for American Progress calls “child care deserts” in states like California, where estimates suggest that only 25 percent of working-class parents have access to providers. In a 2016 survey from NPR, Harvard and the Robert Wood Johnson Foundation, one-third of parents reported it was difficult to find childcare; 2 in 3 say they had few “realistic” options.

That paucity spurred Chris Bennett and two friends to start their own childcare service in the hills of Berkeley, California in late 2016. Little did they know then that it would spawn a company, Wonderschool, that would attract hundreds of parents, teachers and toddlers. And investors, too.

Wonderschool, based in San Francisco, recently raised $20 million in a Series A round led by Andreessen Horowitz, whose general partner, Jeff Jordan will join the company’s board of directors. Other investors include Omidyar Network, Gary Community Investments and First Round. The company had previously raised $4.1 million in seed funding.

Andreessen Horowitz’s motto is “software is eating the world.” But if Wonderschool’s business model, which centers on physical, in-home childcare centers, is any indication, there’s only so much apps can gobble. The Silicon Valley-based investment firm is also a backer of Airbnb, which operates a similar model that Wonderschool’s Bennett admits he’s inspired by. “Think of us as Airbnb for preschool,” Bennett said at an industry conference earlier this year.

Similar to the home-sharing platform, Wonderschool walks interested childcare providers through the process involved in starting their own home-based businesses. The company also provides an online directory with a user interface that’s very similar to that of the home-rental startup, where parents can browse for local providers on a map. There’s also a built-in payment processing system that facilitates payments between parents and providers.

Each program’s profile includes information about a provider’s credentials, experience and pedagogical approach. (Do you prefer Reggio? Montessori? What about Spanish immersion?) The details get as nitty-gritty as how many snacks a child can expect each day, and whether potty training is required.

Child Care Deserts
Source: Center for American Progress

As smitten as investors and entrepreneurs are with the Airbnb analogy, however, the “sharing economy” industry has also raised a host of legal questions that have led to lawsuits and forced cities to rewrite laws. Here’s where Bennett says Wonderschool differs: “Our space is already regulated. Uber created ride-sharing. Airbnb created hotels in someone’s home.” By contrast, he notes, there is already a precedent of individuals running childcare businesses from their own homes.

A child of Honduran parents, Bennett recalls attending with his sister preschool and after-school programs in Miami set up by immigrant families. Such businesses were commonplace, he says. Plenty of rules governing their operations are already in place, and he’s not expecting anyone to rewrite them for Wonderschool’s sake. “We’re not coming in and saying, ‘We’re going to blaze our own trail.’”

All Wonderschool providers are required to pass a list of state-mandated requirements that include a background check, proof of insurance and immunization and knowledge of first aid and CPR. And depending on the size of the childcare center, operators may need a business license, fire safety license and at least a year of professional teaching or childcare experience. The company also does a monthly check-in with all of its program directors, and has an in-house team of mentors that will make a house visit and provide support if needed.

The full list of checkboxes is long, and Wonderschool aims to streamline the process so that prospective providers who meet the requirements can get their program up and running within two months. Each provider can set up their own monthly fee, 10 percent of which goes back to Wonderschool.

In San Francisco, where the company is based, Wonderschool programs currently cost anywhere from $375 to more than $2,000 per month. (Across the region, monthly tuition for childcare centers range from $1,700 to $2,500.) The company claims its providers currently earn, on average, $78,000 each year from running these programs full time.

Karen Castro, who leads the Retoños Schoolhouse in Daly City, Calif. credits the company with helping her handle the paperwork to get her preschool started. The 10 percent fee is a little high but “reasonable,” she tells EdSurge in an interview. “The main reason I’m with them is that they market the programs pretty well, and I don’t have trouble filling up my spots.”

A former teacher in Honduras, Castro offers a Spanish-immersion, “play-based” program, which currently serves 12 kids per day and 16 families in total. (The company, she says, even sent a photographer to take professional photos of her space.) Her only ask is that Wonderschool provide additional support and training around what it takes to manage the finances of running and growing a childcare business.

The company once aimed to expand its services to dozens of cities, but has since decided to focus on its core markets in Los Angeles, New York and the San Francisco Bay Area. More than 140 childcare programs are currently on the platform, and the company is seeing 70 new applications to open new programs each month.

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