Investing In Human Potential

Lifelong success begins with early education

Happy Thursday, 👋

At our core, we focus on investing in companies at the inflection point of an industry. This week, we are diverging from our usual discussions on startups to explore a topic close to our hearts: early-stage human development and the significant returns on investment in early childhood education. An organization in Houston is at the forefront of this work, striving to create long-term value for children.

The Brain's Development

Several years ago, I met David Eagleman, a neuroscientist, co-founder, and author of The Brain. His research delves into how our brains develop over time and the various factors that influence this process throughout our lives. Much like startups, our brains develop slowly, drawing significant influence from our environment.

Humans are unique in their prolonged developmental period compared to other species. While many animals can stand or walk within hours of birth, human children typically take 10-18 months to walk, requiring more support in their early years. Eagleman's research highlights the variability in how experiences and environments shape brain development. For instance, a two-year-old child has the same number of brain cells but twice the synapses (information connections) as an adult, enabling them to process distinct sounds of language more efficiently. This early period is crucial for education and interaction, akin to how mentors and advisors guide new founders during their first year in business.

The Importance of Early Education

The brain's plasticity at an early age allows children to learn new languages and skills more quickly. This underscores the importance of early childhood education. Unfortunately, most states in the U.S. mandate education only from kindergarten or when a child turns five. However, the first five years are critical; children exposed to educational opportunities during this time are likelier to succeed later in life. This is similar to a startup seeking guidance from day one rather than waiting five years.

Due to the lack of mandated early education, childcare centers vary widely in quality, ranging from daycares to educational centers. Underserved communities often rely on daycare models, as center owners may lack the expertise to balance business operations, staff recruitment and retention, curriculum development, and family onboarding.

Collaborative For Children

Changing early childhood public policy is a long and challenging process. Nearly 40 years ago, Collaborative For Children was established to support working mothers and quickly evolved into a champion for early childhood education. Today, Collaborative provides a structured support network for early childhood centers in underserved areas. Each year, they identify centers with the potential to become Centers of Excellence.

Once selected, Collaborative helps these centers establish business policies and procedures. Once these foundations are in place, they guide the centers in implementing an evidence-based early childhood education system. The curriculum leverages technology and AI, allowing students to learn and develop at their own pace. Additionally, support is provided to families to continue the educational journey at home.

When making a venture investment, we always consider the financial metrics to understand our return on capital. Research by Nobel Prize winner James Heckman found a 7x lifetime return on investment for those receiving quality early childhood education. Achieving a 7x return in venture capital is a home run, making it crucial for Collaborative to continue its work in improving early education.

Additional Thoughts

Recognizing the parallels between early-stage investing and early childhood development led us to deepen our involvement with Collaborative for Children. Over the past few years, we have supported the organization and are chairing this year's annual luncheon in Houston.

We invite our readers to join us in supporting this transformative organization. By investing in Collaborative for Children, we are laying the foundation for future leaders and entrepreneurs. Changing public policy may take decades, but with Collaborative, we can make a meaningful impact now.

Wishing everyone a great weekend,

-The Caymont Ventures Team.