From summer camps to long-term care insurance, automated meal-planning, and renovations to make beloved homes more accessible for older adults, the market for products and services that help consumers care for the people in their lives is huge. In fact, in 2019, the care economy totaled at least $648 billion, making it $138 billion larger than the U.S. pharmaceutical industry.
The sector’s incredible size and potential is one of the key headlines in The Investor’s Guide to the Care Economy: Four Dynamic Areas of Growth
, a report released today by The Holding Co.
, a lab redesigning care for the 21st century, in partnership with Pivotal Ventures.
The Investor’s Guide breaks new ground by measuring the care economy as a singular, holistic market. Moreover, because the report is written by and for market players—the project was stewarded by IDEO
, Springbank Collective
, Magnify Ventures
, and an advisory council of more than 30 leading investors, entrepreneurs, and business leaders—it’s actionable. The findings help founders and funders think strategically about entering the care economy.
Four drivers of the care economy
According to Pivotal Ventures’ Dr. Renee Wittemyer, Director of Program Strategy and Investment, The Investors Guide is also a call to action. “Care is not only a large and rapidly growing industry but a dynamic and investable market. Given care’s importance to the economy and to families, this is the moment for investors and entrepreneurs to step up, help solve care challenges, and seize the incredible market opportunities.” In particular, The Investor’s Guide
describes four key drivers of growth in the care economy.
When schools and day care centers closed to stop the spread of COVID-19, it triggered an exodus of mothers from the workforce and revealed how little support there is for families with young children. However, new federal funding for child care—which totaled $55 billion through March 2021 and exceeded the levels of private spending in all of 2019—has the power to catalyze ideas and innovation for helping families quickly, efficiently find care and enabling providers to expand their operations.
Families are feeling overwhelmed by the rote tasks of household management, and they’re ready to spend money to change that. In an original survey for The Investor’s Guide, 85% of people across income brackets said they were willing to pay each week to save time on tasks like cooking, cleaning, and laundry, presenting a $217 billion opportunity.
The number of older adults is expected to double to 95 million by 2060, as baby boomers enter their later years and people live longer. Additionally, as more and more older adults prefer not to move into residential facilities, insurers are covering services that enable aging Americans to get care at home. Those companies that help preserve the independence of older adults by managing daily tasks—meals, home repair, and transportation—are ripe for investment and growth.
Finally, employers, too, are ready to spend on caregiving. When the pandemic flattened barriers between work and family life, employers started confronting the prospect of losing talented employees. Little wonder, then, that many businesses are now providing more support to help their employees manage their caregiving responsibilities. According to the report, 42% of employers have said they’re planning to expand or add care benefits like cash subsidies for child care. This rapidly growing source of capital provides a unique opportunity for investors and entrepreneurs.
A powerful opportunity for problem-solving
At Pivotal Ventures, we believe that transforming the care economy will have ripple effects for families in the U.S.—and ultimately help expand women’s power and influence. Furthermore, we are optimistic about innovation in this space because the market incentives to meet all these newly seen needs are stronger than ever. To add momentum to this wave of innovation, we’re supporting partners like The Holding Co.
, the author of the report; Magnify Ventures
, an early-stage investor which funds promising care-related companies; the Techstars Future of Longevity Accelerator
, which focuses on innovative solutions for older adults and the people who help them; and Springbank Collective
, which supports and invests in the most dynamic entrepreneurs building the infrastructure to support women and working families.
As the country prepares to emerge from the pandemic, people are demanding new, innovative solutions to care for others in better, more fulfilling ways. What this means for funders, founders, and financial officers is clear: There are 648 billion reasons to enter the care economy now.