Date: January 2016

Where are the Early Childhood Investment Opportunities?


by:
Luis Duarte

In 2015, Gary Community Investments commissioned Imprint Capital,* an asset manager with extensive research capacity, track record and understanding of the U.S. early childhood sector, to conduct a scan of the early childhood and two-generation sectors to help us more proactively pursue investment opportunities.

What We Hoped to Learn

Through the scan, we wanted to better understand who is investing in the space so we can more effectively collaborate with our peers; gage the level of innovation happening within the sector; look nationally for social enterprise models and for-profit and nonprofit innovations that could expand into or be replicated in Colorado; and identify scaled or pooled platforms that could increase capitalization of the sector.

What We Actually Learned

The scan revealed important takeaways related to the market in general and our investment strategy specifically, including:

  • More biz models needed: Due to market fragmentation, lack of public funding streams and challenging economics, there are a limited number of validated business models focused on low-income early childhood.

  • Tech is transportable: Innovations are dispersed nationally, and technology, in general, is more transportable to other geographies than community-based brick and mortar strategies.

  • We aren’t alone: There is a growing interest from philanthropic and for-profit investors in this area.

  • Investing in parents matters too: Two-generation opportunities exist across asset classes, which can help inform early childhood direct investments.

  • No pure-play funds: At this time, no funds specifically targeting the early childhood sector exist.

  • Few alternative funds: Pooled platforms in early childhood are restricted to childcare lending.

  • Impact is driven through direct investment & PRIs: Most direct impact for early childhood is enabled through direct investments/co-investments and program-related investments.

Want to take a closer look at the findings from Imprint Capital’s early childhood scan? Download this report.

*In August 2015, Goldman Sachs Asset Management acquired the assets and business of Imprint Capital.