Deal to Watch: Branded Mobile Apps for the Entire Parenting Journey

Key Stats:

Summary

The Hello Baby team has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

Problem

A 2017 New York Times  article dubbed millennial parents “parennials” and noted that this generation of parents is doing things differently. They rely heavily on technology to solve woes that have plagued parents for generations, like wondering why their baby is losing weight or where they should send their daughter for preschool. As more and more of society turns to the Internet to solve problems of all shapes and sizes, it’s only logical that parents should seek the same level of digital innovation they’ve witnessed in transportation, food, social media, and more. 

After all, parenting isn’t an easy task. It’s become increasingly time-consuming and expensive to raise children, and “parent shaming” fueled by social media is a surefire way to feel insecure about your parenting style. Parents are under more pressure than ever to know the perfect parenting technique, make the perfect parenting choice, and provide an unprecedented level of support for their children. That’s why the “new mom economy,” encompassing all of the new concepts, both physical and digital, targeted at first-time moms, is sized at $46 billion. 

Therefore, brands have a tremendous opportunity to speak to parents online about the challenges they face, all the way from pregnancy to college. More than a million millennials become moms each year, and they are hungry for resources.

Solution

Hello Baby is the developer behind a suite of apps meeting millennial parents where they are: on their smartphones. Hello Baby’s apps provide tips and tracking from pregnancy all the way through the parenting journey, with features tailored to each stage of a child’s development. 

The Hello Baby journey begins with Hello Belly, a lighthearted but informative pregnancy information and tracking app designed to provide pregnancy tips tailored to each week of a woman’s nine-months. Users get 3D and AR models of their baby’s development inside the belly, daily meditations and yoga lessons, and a suite of handbooks and lists related to gear shopping, nutrition, symptoms, and more. 

When the baby is born, parents graduate to Baby Tips, Baby Snap, and Hello Baby. Baby Tips is similar to Hello Belly in that it offers information and resources tailored to the infant’s particular age, including recipes, vaccine schedules, and more. Baby Snap allows parents to record one-second videos of their child each day and convert those clips into videos that nostalgically track a child’s development over time. Snaps can also be shared with friends and family members on a daily basis. Lastly, Hello Baby is a broader baby memory-keeping app that allows parents to take photos, videos, text notes, and more and convert those into physical albums for lifelong memories. 

Hello Baby generates revenue from a freemium model in which users can access limited features within each app for free and receive full features by paying for a subscription. Various subscription plans are offered, including monthly and yearly memberships to a single app, or monthly/yearly/lifetime access to the full suite of Hello Baby apps. 

Hello Baby has received 1.7 million installs across its app portfolio, and boasts 8,000 paying subscribers. Customer acquisition costs are low relative to lifetime value, at a ratio of $9 to $35. Hello Baby generated $600,000 in revenue in 2019, and projects $5 million in revenue for 2020. The company has raised $1.5 million in venture funding from investors like Funcorp, The Untitled, Funcubator, and more. 

The Team

Hello Baby was co-founded by designers and content creators Tim Raiter and Vitaliy Urban. The two possess over 30 years of combined digital production experience and have worked with leading brands like P&G, Volkswagen, Mars, Casio, Bacardi, and more. Both co-founders have won D&AD Best of Year design awards and Webbys. 

Beyond the co-founding team, Hello Baby has four developers and six editors/support team members; it is unclear whether these staffers work full-time or part-time. 

Growth Plan

By August of 2020, Hello Baby hopes to have closed a funding round consisting of crowdfunding and an additional $1 million in capital from current investors and angels. The company intends to use 80% of these proceeds for additional paid marketing to acquire new users, and the other 20% to develop new product features. 

While Hello Baby is vague about exact plans for expansion beyond this fundraising round, hints from their raise materials include plans for in-app telemedicine, a brand new app, neural networks, and a “super app” to provide a one-stop shop for the entire suite of Hello Baby features. 

Why We Like it

• In-house content production and ad-free experience: While there are many parenting apps available for download, Hello Baby apps are distinct from the competition in that they rely on content produced wholly in-house. This tailored content drives a higher-quality user experience replete with cute, branded animations and vetted pregnancy and parenting information. In addition, Hello Baby apps do not rely on ads for monetization, further improving user experience. The lack of ads is doubly compelling to users because in-app data is not shared with external parties.

• Sustainable growth metrics: Cost of user acquisition relative to lifetime value is a major obstacle for many app developers, but Hello Baby’s growth metrics are sustainable. The company’s overall CAC:LTV ratio is a reported $9:$35, and the team has clearly spent time testing various subscription models to maximize monthly recurring revenue from users. This formula of healthy growth sets the stage for Hello Baby to continue pumping dollars into feature development to make their apps all the more sticky, further maximizing customer lifetime value. 

Rating

Hello Baby offers a compelling suite of well-designed, content-rich pregnancy and parenting apps that acquire customers with a healthy margin left to reap a profit from monthly recurring revenue. Led by experienced designers who clearly devote significant time and energy toward branded product design and quantitative testing for optimal monetization, Hello Baby has several key ingredients necessary to build a successful app-based company. 

However, potential investors should be aware that parenting is an increasingly competitive space, with companies like Winnie and Motherly raising large rounds to reach parents online. Ovia Health is a well-funded startup that produces similar pregnancy and parenting tracking apps, though it has been hurt by the data privacy controversy that Hello Baby explicitly avoids by not selling user data. Hello Baby must continue launching increasingly distinctive features to maintain a competitive moat in a hot space for innovation. 

With regard to exit planning, Hello Baby is unlikely to pursue an IPO without a significant product expansion. However, the company could be well-positioned for acquisition if it continues to grow sustainably and build a loyal base of parent users. In a relevant example, Philips acquired a parenting-focused mobile app developer to expand its own digital parenting program in 2017. Legacy brands looking to sell to parents online have strong incentive to build out mobile platforms quickly, and snapping up a successful brand is sometimes cheaper and more straightforward than developing new apps in-house. 

In sum, Hello Baby meets millennial and Gen-Z mobile users online with a leading digital parent product. While the online parenting space is a competitive one, Hello Baby’s sustainable user acquisition metrics are a strong signal of future growth and success. Therefore, Hello Baby is a Deal to Watch.