Founder in Focus: Rachel Carrell, Koru Kids
We sit down with Rachel, founder of Koru Kids, to explore why the childcare industry is broken, how she convinced investors to back an overlooked market, and why she still has no real competition.
Fertility rates in England and Wales have been sliding since 2010, hitting a record low of 1.44 children per woman in 2023—well below the 2.1 replacement rate. We’re officially an ageing population. But it’s not just us. By 2050, three-quarters of countries will be below the replacement rate. By 2100, it will be a staggering 97%.
Why are women having fewer kids? There are plenty of reasons, but a big one is economics - childcare costs are pushing parents, especially mothers, out of the workforce, often called the “motherhood penalty”. Last year alone, a quarter of a million mums with young kids left their jobs because they simply couldn’t make it work.
Rachel Carrell didn’t just spot the childcare crisis - she lived it. Having a baby of her own, she saw firsthand how broken the system was. Friends were making huge, sometimes regrettable, life choices - quitting decades-long careers, leaving London, even rethinking having kids - just because childcare wasn’t working. It wasn’t a lifestyle choice; it was because of a failing system. So, she built Koru Kids to fix it.
In this interview, Rachel spills on why Koru Kids has had zero serious competitors in nine years, why she pivoted from the idea she originally raised £4.5 million for, and why - out of hundreds of startup ideas - this is the one that stuck.
About Koru Kids
Koru Kids is on a mission to make childcare easier, more affordable, and actually great. It connects parents with vetted nannies and childminders, cutting out the stress and making quality childcare more accessible.
Founded in: 2016
Employee count: 51-100
HQ: London, UK
Current funding stage: Series A
Total funding to date: £14.1 million
The interview:
Why now?
I always wanted to start a business so I was somewhat on the lookout for an idea that I could get very passionate about, but it was also very important to me to manage my risk. Often people think about entrepreneurs as risk-taking. Actually, a lot of the ones that I know and myself included, do a lot to manage our own risk, so what seems to be risk-taking behaviour isn't when you look behind the scenes.
For me, it was really important to have my personal life stable because I just didn't think I could cope with having everything up in the air at once. I had recently married, so that leg of the stool was stable and then I wanted to have some savings. I worked at McKinsey for six years and then I was a CEO of a healthcare company. So, I had the relationship and I had the capital. Then I did a systematic search for what was going to be my idea. I went through a process where I forced myself to come up with 10 ideas a day.
At the same time, I had a baby. So, the issues of childcare were very much on my mind! I was also hearing from so many of my friends that the cost of childcare was out of control and it was causing them to make these big life decisions which were sometimes really regrettable. It struck me that was the tail wagging the dog. I saw people, mostly women, giving up careers that they had worked for sometimes a decade to build. I saw people leaving London to be near a family because it was the only way they could make it work. I saw people deciding not to have children or not to have a second child. People were making some of the most fundamental decisions a person can make, just because the infrastructure around childcare was inadequate.
I looked around and I thought maybe I could join this movement. I was coming from the world of healthcare where there are practically unlimited numbers of startups and investors and constant innovation conferences, so my initial assumption was that there would be something similar for childcare .
I was absolutely blown away when I got crickets. There was nothing. There was not one single specialist investor. And nine years in, I can tell you there is still not one single specialist investor, even though this is an absolutely enormous market. Why is this industry under the radar when this is not a secret? This is an industry that touches almost every family. Yet when I started pitching in the early days to investors, they all initially required convincing that this was an industry of any size, even the ones that had kids! I think it’s because it's an incredibly fragmented industry, so when you just experience your local nursery, you don't get a sense of the colossal scale of this industry.
One of the interesting things about my journey is that I had those conversations nine years ago, but now childcare is much higher up the agenda. Nine years ago, it was never on the front pages and now it is. I’ve been part of a political movement putting it on the front page.
Why this?
I pivoted from my original idea. Initially, for the first six months, I wanted to do something called Nanny Share. I raised my first round around this idea. The idea is two families share the same nanny so each family pays 2/3 of the cost rather than the whole cost and their child gets a friend to play with. But, the demand that we had from parents was for the after-school hours. We were trying to sell full-time nannies for babies and we kept getting people signing up for after-school care for their 6-year-olds. This was despite our whole website being full of babies. All the photos, the imagery, the comms - everything was about babies! Yet we were getting sign-ups for this thing that we weren’t selling. Whenever that happens, it’s an indicator of an incredible latent demand in the market. It was a really good signal.
We've now built a childcare marketplace. If you look at what else was happening with marketplaces at that time, Uber was growing really, really fast. In 2016, when I set up Koru Kids, everyone was talking about Uber - they were everyone’s startup poster child. That year, everyone would describe themselves as “Uber for “X” “. I was encouraged by everyone to take any lessons I could from Uber. Uber, of course, is also the poster child for the blitz scaling approach, which I don't think was actually right for us.
At that time everyone said to me, you're going to get huge. You're going to get competitors really quickly. Everyone said this like it was a physical law of nature. They were explaining it to me like gravity. For whatever reason though, that didn't happen with us. I'm now nine years in and we’ve never had any real challengers of any size. People ask me why that is and honestly, I don't have a great answer. It is hard what we do. It’s nuanced and it's a people business. One way of thinking about it is that when you take an Uber, you don't care who turns up. One five-star driver is the same as any other. When you get a nanny, you very much do care.
Another theory is that I suspect fewer founders are attracted to solving the problem of childcare. If you are, I think you would tend to have kids and you would tend to be female. If you have kids and are female you don't have the time.
Why you?
There are two things that I'm probably most passionate about and love and one of them is recruiting. I have a hell of a lot of strong views on how to attract, hire and retain really good people. The other one is marketing. I've always been into content marketing.
I'm not a product founder, so I've had to hire really good product people. But, what I am really good at is convincing amazing people to come and join my team. So my team has always been a team of utter superstars who are so much better than me at literally everything.
As a founder, you do everything initially and gradually hand over tasks as your team grows. I've retained content marketing because I love it, as well as the direction of the company's culture, vision setting, and big leadership decisions.
What are the keys to your success?
Our core business has incredible unit economics. It’s a really good business. We're now in a position where we're growing nicely and we’re profitable. When I think about the future, I'm thinking about how we can leverage our brand and incorporate more partnerships. We might also take more things under our wing and buy or build them, and that's really exciting to think about.
We've also been amazing at building our brand. The Koru Kids brand is so beloved within our customer base - our repeat rates are incredible and our word-of-mouth growth is insane. This is down to a few things. We have sustained excellence in every single interaction. This isn’t to say we don't make mistakes, we sometimes do, but the way my team deals with mistakes is amazing. They are incredible at crafting a comms, sending it out quickly, taking responsibility, making up for the mistake and going the extra mile for that customer. I can't tell you how many times that experience has led to huge advocates.
The quality of every interaction matters. One of the things we do is give our customer service people quite a lot of autonomy to go the extra mile and be creative. They get to recognise the work done by our fantastic nannies.
We also have a really clear purpose and see ourselves as part of a movement. We're not just selling a service, we’re really trying to build infrastructure for the world that absolutely should exist. I think this is something that people can get behind.
What advice would you give yourself if you were doing it again?
I would say don't do some of the innovation efforts that were really expensive and didn't go anywhere. If I could chop off those diversions, we could have got to where we are quicker. But, that's the nature of innovation! You can't know that in advance.
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