Yellownest. Childcare as an employer benefit.

It is commonly known that the 3 main problems in the early childcare space are access, quality, and affordability.  The economics of the average childcare facility pan out to exorbitant costs borne by parents coupled with barely a living wage for the childcare provider/owner due to high staffing ratios and safety requirements.  We know that childcare in the US and UK are amongst the highest in all OECD countries with parents spending up to 55% of their total income on care and we know that hundreds of thousands of parents have struggled to balance child-care with their careers leading to skyrocketing mental health crises among working parents. 

We also know that employers feel the strain too.  As working parents struggle with childcare costs, they’re forced to reduce working hours, resulting in businesses facing diminishing productivity and overall employee demotivation.

On the nursery side, it’s not any better. Nursery closures due to the pandemic have created a high demand and low supply of childcare, which will likely make them busier, and more expensive once everything opens back up. 

And lastly, when it comes to diversity, in the US and UK, businesses have a distinct lack of representation when it comes to female staff taking Senior and Executive roles in part due to these women having to ‘bow out’ to take care of their kids.  In 1950, only 12% of mothers with children less than 6 years of age were in the labor force; by the 1990’s that number increased to over 65% but has since plateaued and is currently at its lowest level since the 1980s because of the pandemic.  Most children now grow up in homes where both parents or the sole parent are employed outside the home, yet our country’s social infrastructure and employer-based benefits have failed to evolve similarly.

YellowNest is choosing to break the mold by addressing a fundamentally different problem in this space, which positions us to fill a gap in the benefits space for forward-looking employers seeking to ensure their organization is future-fit.  We are changing the landscape of childcare benefits and bringing enormous value to give economic power back to the parent community. We will have the primary proposition that would enable parents to access childcare in a more affordable and tax-efficient manner. Alongside this, we want to launch a cryptocurrency including DAO structure (TBC) so that parents can provide liquidity, benefit from spending the currency, and can leverage better financial products in a decentralized manner that works for the community whilst generating additional revenue stream(s) for Yellownest.

By leveraging deep expertise in tax law and regulation coupled with a digital payments platform, we aim to serve as a financial intermediary that employers can offer to their employees as a unique childcare benefit that boosts take-home pay for employees, guarantees top rates to childcare providers, and helps employers recruit and retain top talent.  

Our initial geographic location will be the United Kingdom, with plans for soon expansion into the United States with some adjustments to the model to contextualize the solution to the different regulatory environments. 

Our innovative and simple platform facilitates a salary sacrifice between the employer and employee.  In short, we are offering a business-to-business (B2B) FinTech payment platform, integrating transactions and communication between parents, employers and childcare providers.  Yellownest’s well-designed technology will act as a clearinghouse by collecting pooled funds from employers and directing payments to their employee’s selected childcare providers, efficiently managing accounts payable and receivable.  For example, in the UK, the pooled fund switches classification from Employee Payroll to a P11D benefit in kind eligible for the workplace nursery tax exemption thereby reducing National Insurance contributions and increasing net operating income.  Our expert team of professionals manage all the set-up and allow companies to launch this workplace benefit with ease. We handle payroll, contact all necessary parties, and make all savings accessible to view from the online portal. By adopting this approach, both employer and employee will benefit from reduced national insurance savings and larger take-home pay and earnings after taxes.  And in exchange for providing these services, YellowNest will charge an annual membership fee and monthly processing fees.  Our approach and algorithm will be tailored to each geography to specifically meet the regulatory and legal requirements of each locale.

In parallel, we are developing a US business plan and go-to-market strategy, developing expert knowledge of the US’s complex tax and regulatory environment. 

Part of our foray into the United States will involve not just a different approach, but the launch of a completely different set of products.  We aim to launch non-fungible tokens (NFTs), that will represent membership hence a utility NFT, to allow us to raise funds and expand our envelope of offerings to parents and providers and introduce a digital currency that works for parents to help shape the ‘parent economy’.  These offerings will bolster the ecosystem and enable us to provide additional supports to parents and providers via educational and specialized services.  

The COVID pandemic brought on what was called a ‘she-cession’ where women – particularly African American women, Latina women, and female workers with marginalized academic degrees have been disproportionately impacted by job loss during the COVID19 pandemic.  In April 2020, the US economy shed 20M job.  Almost two years later, women’s recovery in the labor market still lags men’s.  This trend rippled around the globe as women – with higher concentration in direct-contact and service jobs – whose employment before the pandemic was already on unstable ground were forced out of the labor market.  Additionally, if you were a caregiver, school closures and a chronic lack of access to child / family care compounded the challenge landscape.  Employers saw attrition of top talent as parents left the workforce to care for their young and school-age children.  Childcare workers faced levels of never-before-seen adversity, challenges, and ambiguity about how to stay open and healthy in light of the unfolding pandemic. 

The pandemic was a catalyst for our solution, but we’ve been working for years on what is already widely known as a fragile care system especially in high-income countries like England and the United States where there is very little public infrastructure to support early childcare.  Our solution benefits 3 primary stakeholders: 

• Employers:  Lower contributions to National Insurance by up to 14% and benefit from increased retainment, lower recruitment costs, and increased workforce diversity.
• Employees:  Yellownest delivers a ‘payrise’ that comes straight from the tax that employees would ordinarily paid to the UK Government.  Average increase in take-home pay after participation in Yellownest is upwards of 25%.  Working parents also benefit from existing partnership agreements with nursery providers and reduced friction in managing childcare invoices. 
• Childcare Providers:  in addition to predictable income stream and guaranteed coverage of running costs, providers stand to gain up to 20% increase per child placement with payments remitted twice yearly to fund continuous capital improvements and investments.

*We are currently prioritizing fund for our research agenda to support outcomes measurement with our pilot clients and initial product prototype.  

Our team’s approach is aimed at knowledge equity – that is, uniting lived, learned and practice experience to generate insights needed to solve this complex problem.  Historically, knowledge has been concentrated in the hands of the few.  Marginalized groups’ histories and perspectives have been excluded by structures of power and privilege.  Some might even go so far as to say the origins of undervalued care in the United States are rooted in this country’s history of slavery.  Though groups have been advocating for better public support and policies around care for decades, minimal progress has been made at the federal level.   While we remain optimistic that the time is now for policy changes, we are driven to take action within the constraints of our current legal and political systems to find a market-based solution to the problems around care. 

The Yellownest team has a mix of lived experience as working parents, learned experience from independent research and outreach to a broad set of community stakeholders including 450 parents surveyed, and practice experience from industry surveys and market-testing with potential and future clients.   

The financial tools we aim to make available more broadly have historically only been concentrated in the wealthy and elite factions with the resources to leverage specialized financial and tax advisors.  We aim to democratize financial tools more broadly and start leveling the playing field for labor and care providers.  We will follow the best practices of these savvy investors by helping employers & employees optimize their tax-advantages and net pay.

We have a conceptual and high-level view of what could be done with cryptocurrency, but are applying to Solve to gain connections and expertise that is highly concentrated in academic and research institution settings.  This could help Yellownest with value assessment and token economic research, mechanism creation and finalization in a manner that would deliver our vision and benefit the parents and caregivers. In addition, we are looking for decision support around creating DAO and help to articulate the governance approach if the decision is made to launch a DAO, creation of a lite / white paper that can explain what value the currency would provide to the community and a stepping stone for launching research and the coin itself.

 Skills Needed:

• Financial/economic model designer – The person should understand and be comfortable in creating an economic model based on DeFi and Crypto currencies. This individual would also help the Yellownest leadership team shape the value proposition that can be explained to the parent community, investors; and highlight any potential legal / compliance hurdles that may need to be crossed before the actual launch.
• Research Analyst – The person should be able design surveys, research questions based on the cryptocurrency value proposition. Using these, research the market/community to establish product market fit by conducting surveys, focus group. They would articulate and report back outcomes in an easily understandable format which the Yellownest leadership team and the economic model designers can incorporate the feedback into the tokenomics.
• Blockchain Engineer – A person who is able to work on various blockchain across cryptocurrency creation, deFi protocol and distributed app (smart contract) creation. This person will help the CTO to execute short / sharp proof of concepts to evaluate technology selection, test ideas and deFi protocols.
• Blockchain Legal Enthusiasts – This person will closely work with the CTO, economic model designers to identify key legal and/or compliance challenges in the key market that Yellownest is planning to launch. They should have clear understanding of Blockchain technology, specifically cryptocurrencies and DeFi protocols. They should be in forefront of regulations at least in Europe (more specifically UK) and US, but also be aware of progress in other countries. This individual should be able to provide guidance to the leadership team on company structure that is most effective for cryptocurrency based value propositions

We believe our product is both disruptive and transformative in the sense that it introduces an entirely new possibility in the realm of childcare benefits.  We provide an unparalleled tech-driven employer-based benefits solutions to working parents that adds value for employers, employees, and childcare workers.  By leveraging our digital payments platform we offer a solution that financially benefits all parties thereby lowering the burden of childcare costs to working parents and increasing effective rates for childcare workers and lowering the risk of employee turnover due to sacrificed employment of working parents.  By contrast, other competitors in this space are solving a completely different and narrow problem – i.e. employer-based childcare programs (asset-heavy, capital intensive, high degree of safety and regulatory requirements) or employer-provided back-up care for emergency care coverage (inadequate, expensive, and doesn’t address the chronic problem of cost, quality, and accessibility of childcare for working parents).  Additionally, we believe our secondary NFT and cryptocurrency value proposition could set us apart in the industry and bolster an entirely new ‘parent’ economy.

Yellownest has designed a multi-layered social impact model that benefits all stakeholders involved – a true win-win-win scenario.  Exorbitantly high childcare costs and poorly paid childcare workers is the definition of a market failure for which there has never been a policy solution.  This broken model represents unmet potential for society and future generations in terms of lower GDP, lower labor market participation, and lower rates of innovation and development.  Without the social infrastructure in place, parents, employers, children and the economy will suffer and stagnate, and inequality will continue to grow.  

In the shorter term, we will measure our social impact through an increase in labor market participation rates for working parents, reduced workforce departures for new parents, and the total number of children enrolled in our service.

We are working to improve the quality of life of working parents and their children by allowing parents to increase their take home pay and for children to get the chance to go to nursery school. By working to allow all children the chance to receive a high quality education from an early age, we have the opportunity to lay a foundation for a more socially inclusive society. We are working to ensure that all children receive the same care and support regardless of their parents income levels. We are working to make quality education more accessible to all. We want to ensure that all working parents have the financial means to allow their children a primary school education, shall they wish to do so. We are also working towards the UN Sustainable Development Goals (SDGs) and use it as a framework for our social impact.  

We will use the following indicators to measure our impact across all three stakeholder groups:

• Employers:  Increased retainment and reduced turnover of working parents.
• Childcare Providers:  increased satisfaction, revenue predictability, and reduced staff turnover with affiliated providers, improved livelihoods of childcare workers.
• Working Parents:  Increased financial returns, increased work/life satisfaction and balance, increased career advancement and retainment with employers.

We believe that by leveraging employers (i.e. employer benefits that they offer their staff) and government support (e.g. tax subsidies) there is greater value that can penetrate the early years ecosystem.

This will permeate in employers motivating their staff and greater productivity across industry. This access will also enable working parents and their children to access critical development in early years. Over time, this will result in enhanced gender diversity across the spectrum of society.

Our initial product offering is based on a new application of an existing technology with both a web-based platform and app user-interfaces.  Our innovative business model will automate payments for employees, work with employers on payroll deductions, and eliminate compliance risk by ensuring ever-changing federal, state, and local laws are codified in our platform from start to finish.   Our platform will provide a seamless integration with payroll and Human Resources systems.  Additionally, our ambition for disruption innovation involves leveraging the power of decentralized finance and blockchain technology.  

Yellownest has a team of people committed to delivering social impact with the motivation to change the lives of as many people as possible.  Our leadership team is diverse both in terms of gender, race, ethnicity, geographic location, skillsets, work styles, and identities.  We think and act as one global organization to deliver impact for the world measured in lives and livelihoods improved.  We drive toward a high-integrity culture working with each other and our partners and clients in a way that is fair, consistent, transparent, and in service of our shared goals.  We also aim to sustainably integrate DEI into everything we do – from how we work with others to how we recruit and build our organization and hold ourselves accountable as leaders.

YellowNest is a B2B payment platform for working parents to use for childcare, in partnership with employers.  In our initial market of the UK, our service can provide an uplift of anywhere between >50% for parents in their monthly take-home pay, an instant 2x-5x  in recurring monthly savings for the employer via monthly payroll at source, a National Insurance savings of 13.8% for the employer. As a social enterprise, we also commit to giving a percent of our fees earned to our childcare provider partners.  

Our FinTech solution is a financially sustainable business model generating immediate and positive cash flow by selling our product to employers as a childcare benefit offering.  In the near future, we will also aim to raise funding through an investor round to catalyze the launch and growth of our additional revenue streams to further our reach and impact.  

Yellownest has raised $100k in 2021 which to cover marketing costs and regulatory set up. The Founder has also invested $200k in addition. 

Post-launch the business model lends itself well to revenue/order book-based financing.

There are several private investors/funds that have expressed an interest in investing further into the business. The fundraising plan is in development with considerations around social impact at the fore of considerations.