SmartStart
Early childhood education really matters. So does quality daycare. Most kids in South Africa get neither.
The Idea
Quality-daycare Microbusinesses
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Total Investment
750000
Grants
0
Equity/SAFE
0
Debt/Convertible Debt
Funded Since
2021
Geography
Sector
Structure
The Mission
Get South African kids school-ready.
How It Works
SmartStart trains and equips women to run childcare businesses in poor neighborhoods. They help them find and equip the right space (homes, community spaces) and teach them how to deliver a play-based curriculum that builds cognitive, social, and emotional skills. Owners learn basic business skills and operate under the SmartStart brand.
The Dream
Universal quality early learning and daycare delivered by regulated and subsidized small businesses.
Why We're In
SmartStart supplies early learning for kids and daycare for families who need it most. They have professionalized 15K businesses that serve 150K kids who make big gains in school readiness vs. kids nationally. They’re eager to decouple this impact from philanthropy. Quality daycare is expensive globally, but they’ve helped champion serious subsidies and regulations, with families and government paying 50% of costs and growing. They have real momentum toward universal preschool in South Africa by 2030 and a great model for serious governments to copy.
The Model
A solution that works and can scale.
Registered practitioner
Childcare practitioners (with a minimum of a high-school education) are trained to 1) maintain spaces, 2) provide effective learning, 3) develop solid SmartStart-branded businesses that families pay for, and 4) become government registered entities eligible for subsidy. Supplementary assistant training (for those who have growing class sizes) is also offered.
Safe spaces
Home and community spaces maintain a stable and safe environment as mandated by existing care law, including a 10:1 child/adult ratio and learning spaces divided by educational interest areas.
Effective learning
Best practices in early learning inform a daily routine : stable and caring environment, positive adult-child interactions, child-directed play, interactive storytelling, and strong caregiver relationships.
Nutrition
Daily meals that meet minimum nutrition standards.
Potential for Impact at Scale
Mulago uses four criteria to gauge potential for exponential impact. The model must be:
This is about impact and evidence. A 2023 independent study using South Africa’s globally-aligned ELOM (Early Learning Outcomes Measure on motor skills, early numeracy, executive function, and early literacy) shows that 65% of SmartStart kids aged 3-5 met their age-level standard, up from 43% after 8 months. Gains for the poorest kids were the biggest. Only 46% of kids from a representative national sample in the same study met age-level standards. This figure is lower for kids without any care, SmartStart’s target population.
What we know now is based on SmartStart-supported businesses, not at scale without this support.
This is about scope. There are ~7M kids aged 0-5 in South Africa with ~5M from the poorest households. South Africa’s government has committed to universal ECD by 2030, but there’s a supply gap of ~100K businesses for ~1M of the poorest kids. There is a government childcare subsidy in South Africa and SmartStart has unlocked a promising childcare start-up stipend for new businesses. Whether this is enough for a critical mass of businesses to be sustained is unknown. Beyond South Africa, regulated ECD options exist in a handful of African countries, but are unaffordable and no government has made similar progress to bring down costs.
This is about whether businesses can deliver the model. 15K businesses are currently delivering the model, with significant coaching from SmartStart and its 13 NGO partners provided over 2 years. Over 70% of SmartStart businesses remain open after 3 years. This compares to 70% rates of survival for small businesses in South Africa generally. Businesses currently get ongoing coaching and support from a web of partners with varying quality. SmartStart is focused on reducing in-person coaching and beefing up these services through a regional/provincial hub model led by the highest performing NGOs.
This is about what the model costs if delivered by businesses and whether customers are willing and able to pay. In SmartStart’s model, families pay with costs reduced through government subsidies to businesses. For a business with 10 kids, it costs $360/child/year against revenues of ~$180/child/year . An expected jump in subsidies (ECD and Nutrition) by 2027 will bring revenues to ~$275/child/year (or 75% of costs). At scale, the combined revenues will bring most businesses to profitability. A mix of government and philanthropy covers ongoing supports from SmartStart of ~$13/child/year which should be halved by 2031 .
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SmartStart is in mid-growth.
Our Take
SmartStart's impact on child outcomes is compelling. It’s not an RCT but it’s from an independent, nationally representative study that’s refreshed every 4 years, and good enough for government. The government wants universal ECD by 2030. The supply gap for getting the poorest kids in care is over 80% of 1M so there’s still a lot to do to meet the demand. Cost/child is still high, but existing revenues will cover 75% of business costs by 2027. If costs continue to fall and more businesses are onboarded, we see a clear path to scalability.
Are you a serious funder and want to learn more?
This is just a snapshot of what we know about the organization. If you're an investor or funder that might send some serious dough their way, we're always delighted to share more. Reach out and we'll connect you with the right person on our team.
*this is not monitored for funding requests.
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