VANCOUVER — When Julia Slanina started fundraising late last year for Treehouse, the pre- and postnatal care platform she founded, some of the venture capitalists with whom she met lived up to the stereotype of being dismissive of female entrepreneurs—especially one pitching a product for parents. “I walk virtually into the space and they just look and they say, ‘Well, oh, it’s just a woman talking about pregnant people,’” said Slanina of some of the investors at those meetings.

Other VCs, though, were eager to talk—if not because they themselves were parents, then because of the COVID-19 pandemic’s upheaval of parenting as we knew it.

The pandemic has been the biggest force prompting investors to look more closely at the space in which Slanina’s Treehouse operates. The emerging sector, called parent tech, received over three times more venture capital dollars in Canada last year than in the previous six years combined, according to PitchBook data.

In 2021, Canadian parent-tech firms closed six deals totalling US$67.54 million, according to PitchBook. Between 2015 and 2020, the sector also completed six deals, collecting US$21.6 million total. It’s a small fraction of the US$12.3 billion in private investment that Canada’s tech sector saw by mid-December last year, but one that’s growing by the number of deals and amount invested annually.

A similar trend is playing out south of the border. In the U.S., parent-tech firms attracted more investment last year than the previous four years combined, according to PitchBook. The excitement around the category in the U.S. made it “a point of attention” for investors in Canada, said Swati Matta, founder and CEO of Toronto-based Koble, which makes an app for new parents.

Of the Canadian firms, HiMama, a Toronto-based company with an app that allows child-care providers to communicate with parents, secured the largest round last year, closing a $70-million Series B in November.

“The interest level was very high,” said HiMama co-founder and CEO Ron Spreeuwenberg—higher than when the company closed its $7.25-million pre-pandemic Series A. HiMama experienced “an insane amount of inbound interest” over the past 18 months, he said, with a lot of calls and emails from funds with a fairly serious interest in investing. The company found itself in a seller’s market, giving it the chance to be selective. In the end, HiMama chose Bain Capital Double Impact, which aims to work with businesses that create positive change in the world, to lead the round.

Spreeuwenberg, who co-founded HiMama in 2013, has long believed in the benefits of child care and early-childhood education. He talks eagerly about the positive impact to kids’ development, the economy’s strength and women’s participation in the labour force. But before COVID-19, those arguments found less traction.

Then COVID-19 shut child-care centres and schools across Canada. Working parents—especially mothers—felt the burden of juggling jobs and caring for their children with little respite. Parents collectively lamented their new reality. “I think the benefits of the sector were just a little bit undervalued,” Spreeuwenberg said.

Some of those parents happened to be working in venture capital, and as Treehouse’s Slanina discovered, they were keen to back potential solutions. “When they can relate to the actual pain and the way that our software solves that pain, [then] they tend to be more open to the discussion and then understand the scalability of the product,” she said. 

One such firm, Garage Capital, led last year’s seed round for Koble, motivated in part by the experience some members of its investment team had after becoming parents, said the fund’s co-founder and general partner Mike McCauley. For them, Koble’s pitch resonated. The pandemic changed parenting and its added complexity just boosted the belief that solutions for parents are needed, he said. “When there is change, oftentimes there’s opportunity.”

In its most recent budget, the Liberal government announced a national child-care initiative that promises to cap child-care fees at $10 a day across Canada by 2025–26. It has since signed agreements with 12 provinces and territories, with Ontario the holdout. In the U.S., President Joe Biden announced the American Families Plan last April, committing to capping how much low- and middle-income families spend on child care. This government intervention helped shift venture capitalists’ attitudes to the sector, said Spreeuwenberg. “I think governments committing serious dollars toward child care has caught the attention of the investment world,” he said, with investors betting government action will lead to growth in the companies that service this sector.

The pandemic also sped up a collective embrace of digital technologies, even in sectors where they’ve long been resisted. KixCare, Shoppers Drug Mart and Telus have all bet on the future of telemedicine. “If you spoke to someone in 2018 … and said to them that, ‘I’m going to have a video call with my doctor,’ they’ll look at you and say, ‘Is that even legal?’” said Slanina, Treehouse’s CEO. “Fast forward to March of 2020, and suddenly everyone is taking video conference calls with their doctor.”

Round 13 Capital, a Toronto-based VC firm that funded HiMama’s Series A and participated in its subsequent round, has found success investing in software firms that offer solutions for largely pen-and-paper industries. It saw similar potential in HiMama, said partner Brahm Klar. The more research the firm conducted into the industry, it realized parent tech was “an area that was … ripe for digital solutions.” Increasingly, parents are tech-savvy, he said, and child-care centres want to offer digital solutions and optimize operations. HiMama now supports its clients with temperature checks, wellness screening, and contactless drop-off and payment, Spreeuwenberg said.

There’s also a growing sense that parenting and child care could, just maybe, be more than a woman’s emotional and physical domain. There are signs some men are choosing to be more active fathers. In recent years, the number of hours dads spend on child care has grown (in the U.S., it was up from 2.5 hours a week in 1965 to eight hours weekly in 2016). Koble said about three-quarters of its inbound queries came from the partners and support people of pregnant women, asking whether the company’s offering will educate them on how to help. “The market is much larger than what it was initially when it came to parent tech,” said founder and CEO Matta. Patrick Lor, managing partner at Koble investor Panache Ventures, said he thinks this mindset shift towards parenting as a team sport has helped drive the category’s growth.

Koble is planning to raise a US$3-million to US$5-million seed round later this year. The prospect of that next round feels more exciting to Matta as the conversation around parent tech enters the mainstream. “We’ve seen recent investments across family forming to gender-specific mental health solutions to child-care support platforms,” she said. “And that in itself is a really great signal in the market that we’re going to see more investors invest in this category as a whole.”