Mirza's Care Now Pay Later for Childcare

Childcare is broken--unaffordable for families, yet unsustainable for providers.

This is a broken market that requires system-level rethinking: at a fundamental level, we need to rewire how American society views childcare as an individual family's responsibility, into a social justice issue that presents a future of work opportunity. Breaking down the market into its component parts:

Supply - 51% of Americans live in a childcare desert (Center for American Progress, 2018), meaning the number of kids outnumber licensed care slots at least three to one. Early childhood educators (predominantly Black and Brown women) are paid poverty-level wages. 

Demand - Infant care is more expensive than college in 33 states, and the high cost of childcare often forces a parent - women as a default parent - into a double bind deciding between work and care cost. Yet, American families often need dual incomes to remain "middle class," and childcare cost is a huge contributor in 72% of Americans making under $50k/year living paycheck to paycheck (LendingClub, 2021) and unable to absorb financial shocks. At the same time, women who leave the workforce in families that can afford single incomes face the “motherhood penalty,” losing 39% of lifetime earnings after just a year out. 

Externalities - The broken childcare system costs employers $13 billion/year in lost productivity (HBR, 2021), and when new mothers leave the workforce, turnover costs businesses between 16% of annual salary to hourly workers, to 200+% of annual salary to executive levels.

We're building a centralized platform that delivers financial solutions for both sides of the childcare marketplace. We're starting on the demand side, with employer-subsidized, interest-free "buy now, pay later" to spread out costs for employees for childcare. This "buy now, pay later" funding is delivered through our technology, which integrates family and caregiving-driven financial planning with employer-offered benefits and government-provided supports. 

Our platform supports informed decision making as we build in the tradeoffs that parents make between work and cost of care, helping parents understand the compounding interest, earnings potential hit, etc. that make the math more complex. Families can see their earnings this month, year, and future trajectory, next to their expenses at the right points in time. We build in mechanisms to cover costs through employer and government supports, then assess the needed childcare funding that would alleviate the burden and allow families to start saving. The amount Mirza funds goes directly to childcare providers through our platform and is covered in part by employers, so families can spread out a portion of their care costs from the highest point (infant and toddler care), interest-free, to later, when kids are in school and parents have had opportunity to increase earnings. Employer payments operate on a sliding scale, covering interest at the lowest level, to subsidizing the cost burden that we assess to be unaffordable.

As our platform directly pays providers, we'll have MRR data for future revenue-based, interest-free products that enable providers to increase earnings capacity.

Our target customers are enterprises whose operations rely on childcare; while knowledge workers may also rely on childcare, we're focused on more operational industries (retail & distribution are first areas of focus) where childcare--or the lack thereof--has a direct impact on success. 

In the 2018 US census, hourly retail workers alone accounted for roughly 6.3% of the labor force, and over half the retail sector is made up of women, while Black and Latinx communities are both overrepresented in this sector: 12.5% in retail vs. 11.4% overall and 18.7% in retail vs 17.5% overall, respectively. Retail is also predominantly low- to moderate-income, with even median supervisor position earnings at $42k, below the overall full-time workforce median earnings of $48k. Our initial focus is on this sector, which has roughly 10 million workers in firms with 500+ employees in the US, accounting for $270B in payroll annually.

However, that represents a fraction of the employer market. Parents make up 40% of the workforce, and 23.5M working parents relying on childcare. We see our TAM in the future as unlocking the ability for the 34M US workers caring for a child under 14 to thrive at work and at home. 

When our CEO, Siran's, family moved to America, her father left them. I grew up watching my mother work an hourly job during the day, go to school at night, and I experienced firsthand how moms aren't set up to succeed. I definitely felt the stigma in having free lunch at school and the social isolation when unable to participate in paid extracurriculars or summer programs. The bulk of my career thus far had been at Uber, where I built the driver support team in NYC. My team was predominantly Black & Brown women, a lot of single moms, and childcare and school hours had to influence our operational hours. I'm keenly aware that it doesn't usually work that way: employers don't set different shifts for employees based on their need at a large, scalable level. We had team members turn down promotions when they realized it would mean losing subsidized housing, and I had an employee who qualified for childcare vouchers go into debt in order to pay for higher quality care for her daughter. 

The barriers we face will be multiple; building a credit product in the US will have a mountain of legislation attached to it. We are speaking to both businesses as clients and also local governments, such as the NYC EDC, and there will be challenges with navigating both public and private sector simultaneously.

Becoming a Solver for us is mostly about the network and support that we could get as we tackle the childcare crisis. We've found that the FamTech network is already so supportive and collaborative, and working alongside 7 other tech companies to tackle the same massive problem would be a great experience. 

Most childcare solutions try to take margin from the providers; as is clearly evident over the last couple of years, this isn't sustainable for the providers. 

We also don't want to continuously put the onus on the individual to cover the cost of care fully; by involving the employer and potentially local government, we're giving people access to zero-interest financing that allows them to spread their costs over a longer period of time when they've reached a higher earning potential. 

We fully believe that support such as this is something that the government should be providing - however, the US has demonstrated time and time again a very strong resistance to programs like this. We hope to launch our product and gather enough data and get enough families using this that we can actively and finally influence policy change down the line. 

The number one issue with childcare right now is affordability; we're finally tackling that from a way that works for all of the players in the system without penalizing one group too harshly. 

In the next 5 years, our goal is to have 2 million families using our zero interest BNPL for childcare, so that working women/parents are able to stay at work and contribute to the economy. 

For 2023, our goal is to launch a pilot of our BNPL in a major metropolitan city with a teacher network, so that we can help improve the teacher shortage and prove our concept. 

We will look to launch our BNPL with a major corporation in 2023 to prove that care IS the future of work. 

By using employers as a distribution channel, we have direct access to understand if this financing is contributing to women's increased labor force participation. 

As we haven't launched it yet, we don't have those proof points, but will be able to measure the impact on overall employee financial health and employee retention. 

Mirza’s tech product today is a Trojan Horse, creating the data for the real financial solution of tomorrow. Today, our platform is an employee benefit for financial planning and execution, with an emphasis on caregiving and the bespoke, individual costs for families. We help employees understand their childcare costs, explore future family financial resources, and solidify financial goals. Our platform surfaces relevant employer-provided benefits and policies, and seamlessly calculates the optimal contributions into key pre-tax benefits, such as the HSA and Dependent Care FSA, based on your overall family finances and upcoming costs. Not only does this aid in discovery and utilization of benefits, but it also generates tax savings for both employee (income tax) and employer (payroll tax).

Unlike other financial planners, our platform enables parents to compare across plans for childcare set ups, time away from work, geographies, and more, so the time-bound high childcare costs are contextualized with long-term financial outcomes. Critically, this allows us to capture the delta between the childcare cost you can afford, and the real cost for your ideal childcare setup.

We're two female co-founders who have already built a diverse team across the board, and our commitment starts with our work environment. Our team has the flexibility to work the hours they need to account for caregiving and different needs, and we're committed to performance tracking based on KPIs, not face time. We demonstrate this as a leadership team and have operated since day one (of having employees) with everyone putting the needs on the calendar, from school pickups, to a can't miss yoga session. We also have hiring practices in place to interview diverse candidates and evaluate based on scorecards/assessments that measure skills for the role, so we don't look for specific backgrounds like university or company experience that can be gate-keeping. 

We are a B2B subscription model; employers pay a monthly or annual fee for their employees to have access to our planning tool, and then an additional fee per employee who takes out the BNPL financing.

We will partner with a financial institution on the credit side (we're in discussions now and will select our partner by May) and our revenue will be a revenue share with that financial institution. 

The monthly fee that an employer pays covers the interest on the financing, so that employees have zero interest credit lines of up to $10,000 to help tackle the affordability of childcare; thus helping employers retain those employees. 

We are a pre-seed stage company, and are undergoing a seed round of raising right now. We are also negotiating contracts with some of our first employer clients. 

Our financially stability will come from both institutional funding as well as the revenue that we generate by offering our products and services. 

We raised just under $1.4m this past summer for our seed round, and are looking to raise $4-$5m in this upcoming round in order to hire the people we will need to launch our BNPL product. We are negotiating a contract with a 300,000 employee retailer in the US right now, and expect that contract to be substantial in covering our costs as well.