We need more private kindergartens

According to the Federal Statistics Service (Rosstat), there are 45,900 kindergartens in Russia. These statistics do not make a division between private and public kindergartens although, according to BusinesStat, private kindergartens accounted for 2.6% of the total number in 2019, a tendency that seems to persist today. We decided to review the preschool education market, our expert being Yulia Korichneva, founder of I Love Montessori kindergartens and speaker of the Secret of Childhood international project focusing on Montessori startups.

According to Rosstat, there are not enough preschools even in cities with populations of over one million: 38.3% of children in big cities could not get into a kindergarten due to a shortage of places. In cities with smaller populations, this problem is equally evident (36.8%). In rural areas, some 48.6% respondents said they had no kindergartens within a walking distance and 12.5% said there were not enough places.

BusinesStat found that around 1,000 kindergartens close every year. For example, there were 50,100 kindergartens in 2015 as opposed to 47,400 in 2019. It is expected that the trend will continue and the number of kindergartens in Russia will reduce to 41,100 by 2024.

Private kindergartens offer a solution to the lack of preschool educational institutions. The pandemic triggered a demand for private daycare. After spending all day at home with small children, by August 23% more parents applied to private kindergartens and the supply also increased, by 9% on average nationwide. Yandex searches reflect the increased demand as well: “private kindergarten” is searched for 126,000 times per month and “private daycare” 155,000 times per month.

Despite the fact that this market is still a blue ocean for entrepreneurs to dive in, socially-oriented businesses are rarely considered commercially successful. However, according to a World Bank research, the earning capacity of social impact investment in developing countries in the past 50 years has been 15% higher than that of S&P 500 investment. A GIN study shows that 70% investors find the financial appeal of impact investment equally important as other investment strategies.

The number of children in Russia has been growing steadily since 2010 — thanks to the government’s stimulating demographic policy.

While birth rate is rising, the construction of new public preschools is lagging behind. Some 37% of families can’t get a place in a public kindergarten due to shortage or give up their place because they believe that the quality of education does not meet their expectations. Yandex users search for “public kindergartens” only 14,000 per month, or nine times less than private kindergartens. Many parents have reconsidered their approach to schooling and are willing to pay for better quality. Families that can afford private education opt for private kindergartens with an education license. The average monthly fee in the region is RUB 27K—35K ($368—476).

High-profile entrepreneurs are increasingly turning their attention to preschools. Igor Rybakov and his wife are building a chain of private daycare centers. It is likely that the number of kindergarten businesses will only grow. We can see the demand emerging based on our own franchise. We received eight applications even before we started selling the franchise. Our kindergartens in Moscow, Ryazan and Izhevsk are about to open. We have also recorded high demand for our business course, Your Successful Preschool, which has received 20 applications since its launch.

By Yulia Korichneva, founder of I Love Montessori kindergartens

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