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Woman entrepreneurs with venture funding usher in fancy new industry

Hindustan Times:  February 24, 2015

Bangalore/Chennai: It is a mellow afternoon in Bangalore’s technology industry hub Whitefield. A dozen kids are lying in a dormitory, some half-asleep, some awake and some still deep in slumber. You can see them through a waist-high glass partition from a corridor festooned with colourful animal pictures.

The doors are computer code-secured, and a learning centre on the other side of the corridor has iPads, and a large multimedia screen. A little above, there are closed circuit cameras — for grandparents living oceans away to take a peep across time zones.

Welcome to the new world of corporate childcare chains that double up as early education centres. An offshoot of India’s hyper-active IT-BPO industry, they are springing up in buzzing hubs such as Bangalore, Chennai and Gurgaon to help busy parents juggle careers with their desire to make savvy achievers of their kids — while hoping they would get the parental warmth they themselves had received.

“Every child has a unique log-in ID and password,” says 40-year-old Priya Krishnan, founder and CEO of KLAY (Kids Learning And You) Schools, a 28-centre-strong Bangalore-based chain, the industry leader. “We have teachers, not just caregivers.”

Founded in 2011, KLAY is a division of Value Budget Housing Corporation, founded by former Citibank India and MphasiS BFL head Jerry Rao. VBHC is now eyeing an initial public offering (IPO). It has received $3 million in venture funding till date.

In Chennai, a similar venture sprang up with Sridevi Raghavan went to the Harvard Business School in 2006 for a mid-career MBA. What she pitched in a business plan contest at Harvard impressed judges, and they immediately offered venture funding. In 2009, the former Ogilvy & Mather advertising executive founded Amelio — short for Ameliorate, and her husband Jawahar joined in later.

Similarly, KLAY was born at the London Business School where Priya Krishnan was a mid-career student after a long innings as an IT professional who had led European operations at MphasiS Software.

WeCare was founded in Bangalore by Reshma Shrinivas, 43, when she faced problems herself as a career-happy mother after a long innings at the then Satyam Computer Services, which was later folded in to Tech Mahindra. She found gymnasiums and food courts at the corporate hubs where she worked. But something was missing.

“No one had spoken of childcare, though the buildings were world class,” recalls Shrinivas.

KLAY, Amelio and WeCare — which between them look after kids from six weeks to 10 years — have their curricula rooted in child psychology and state-of-the art learning concepts such as the “multiple intelligence theory” that believes in natural ways to unlock the talent of children. At the other end, they are playing on corporate desire to attract women into their work-forces.

“I have seen female bosses struggling for work-life balance. At some point women would back off from careers, or in worst-case scenarios, we would have divorces,” Sridevi recalls.

Sridevi says the decline of joint families has deprived many kids of old-world support even as many grandparents increasingly prefer peaceful retirement.

Maids who play nannies are out of vogue because parents want more than cuddles and feeding.

Citing software industry association Nasscom, Sridevi says there is a 35% participation by women at the graduate level but it drops to 8% at middle management levels as they worry about raising a family — just when companies need experienced talent. Re-hiring is expensive.

Amelio, which has 14 centres, raised its second round of funding last year from Boston-based Equity Management Associates. WeCare, born in 2008, now has 8 centres in Bangalore, and will have one soon in Hyderabad – exclusively for Microsoft. It plans to raise venture capital next year. KLAY runs onsite centres for Genpact, Hindustan Unilever and Royal Bank of Scotland, and employs 440 people to look after 1,500 kids.

Eleven of them came from the acquisition of a chain called The Little Company. With venture funding from Kaizen Private Equity, its ambitions are high. “We plan to get to 100 in three years,” says Krishnan. Amelio runs exclusive centres for Computer Sciences Corporation and HCL.WeCare, 250 employees strong, has tie-ups with as many as 35 corporate clients. Some companies pick up the entire service fee, while others take discounts in bulk corporate deals. Real estate companies setting up IT hubs also throw in child-care space to lure corporate tenants.

Some centres are set up in residential areas, but onsite childcare at corporate hubs works better because parents can visit their kids. Grooming talent is a challenge for all. KLAY has a tie-up with a Singapore-based college that blends online and offline teaching. WeCare has a trainer in each of its centres.

All centres are fully owned. Franchise model does not seem to work, because faculty training and safety with quality are critical and also because franchisees typically look for higher returns, says Krishnan.

“Educating parents that this business is beyond custodial care is a challenge,” says Shrinivas. These startups may find inspiration in New York-listed Bright Horizons, which has a market value of $ 3 billion (R 18,000 crore)

Sridevi recalls meeting its founder, Roger Brown, who told her: “This is not McDonald’s. We are not selling products. We are readying children for life.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

x IBEF : India Brand Equity Foundation