Industry research
Scope
US
Companies
98
Table of contents
What does the Childcare services market landscape look like in the US?
The US childcare services market is highly fragmented, featuring sizable businesses and smaller regional centers complemented by various large chains. Identified players seek to differentiate through strong brand reputation, service quality and tailored offerings, such as on-site childcare at workplaces (e.g. Bright Horizons). Notably, the players face financial viability challenges, requiring high enrollment rates to sustain profitability due to significant and rising variable (e.g. salaries) and operational costs, recruitment difficulties and mandatory supervisor-to-child ratios.
What is the level of investor activity in the US Childcare Services industry?
Sponsor-led interest has been limited, with ~13% of identified assets being investor-backed (March 2025). Investor interest is primarily driven by the rise in return-to-office initiatives, the ongoing shift towards single-parent households, all-time high employment rates among women as well as the increasing awareness of childcare's role in enhancing children's learning outcomes. On the other hand, decreasing US fertility rates, persistent skilled teacher shortages and rising childcare costs, which cannot fully be passed on to parents, serve as detractors for investors.
What are the key ESG considerations in the US Childcare Services industry?
ESG topics mainly revolve around social and governance aspects. Here, social challenges relate to affordability and access to childcare services. To address this, incumbents provide different payment options and subsidy initiatives and introduce alternative channels to enhance access to their services, such as childcare services at employers’ sites. The governance agenda relates to upholding health and safety standards for children in preschool and daycare facilities. Herein, identified players prioritize children's well-being by implementing cleanliness and safety protocols, conducting employee screenings and requiring teachers to hold valid certifications.
According to Technavio (December 2024), the global children's daycare services market generated ~$333.8bn in revenue in 2024 and is forecasted to reach ~$521.3bn by 2029 (+9.2% CAGR 2024-2029)
In 2022, ~8.4% of US parents with children under 18 use childcare or daycare centers, ~5.0% enroll their children in nursery or preschool and ~5.1% rely on before- or after-school care services (United States Census Bureau, November 2023)
The rise in return-to-office initiatives of both large corporations (e.g. Amazon, UPS, Boeing) and smaller businesses requires employees to increase their days of physical presence on the work floor. This shift increases demand for out-of-home childcare, creating growth opportunities for incumbents (CNBC, January 2025; Morningstar, January 2025)
The ongoing shift towards single-parent households and all-time high employment rates among women drives demand for childcare services. To illustrate, the percentage of US children living in single-parent households tripled between 1960 and 2023, while ~75% of women between 25 and 54 years old were employed in 2023 (IUSSP, January 2025; Reuters, October 2024; Pew, October 2024)
Rising awareness among US parents of preschool programs' importance in improving children's learning outcomes. Children who attend these programs are less likely to require special needs or to be held back in further stages of the educational system (Early Years, January 2022)
The US fertility rate is dropping to historic lows (-3% YoY in 2023) and is expected to keep falling until 2055. As birth rates continue to decline, the US population is forecasted to see a reduced amount of children aged below 5, resulting in lower enrollment rates for identified players in the long run (CBO, January 2025; Northwell Health, August 2024)
The shortage of skilled workforce, which has worsened following the pandemic as a large pool of workers left the industry for higher-paid jobs. To illustrate, >50% of US childcare service providers face under-enrollment relative to their capacity, mainly driven by persistent staffing shortages (CBS News, November 2024)
US childcare facing stronger costs increases compared to inflation, resulting in working parents struggling to keep up financially. These cost increases are primarily driven by increases in minimum wages and are subsequently passed on to parents, causing them to search for more economic childcare alternatives (SHRM, February 2024)
With the full report, you’ll gain access to:
Detailed assessments of the market outlook
Insights from c-suite industry executives
A clear overview of all active investors in the industry
An in-depth look into 98 private companies, incl. financials, ownership details and more.
A view on all 70 deals in the industry
ESG assessments with highlighted ESG outperformers
