Just released: How to raise venture capital in 2023


Insurance and Risk Management for FamTech Companies

Carl Niedbala - Founder Shield
Carl Niedbala

COO & Co-Founder

Often referred to as Family Tech or BabyTech, FamTech is a rapidly growing market using technology to help parents navigate the challenges of raising a family. Unfortunately, the US still isn’t the most supportive place for working parents — but FamTech aims to lighten the burden. Here’s a look at this unique market, the risks it faces, and how insurance works to support the industry. 

FamTech Market Climate

Although FamTech wasn’t always considered an optimal market in which to invest, it is now. Just like families grow and develop, this industry has reached several essential milestones in the past several years. In short, it’s a hot market for investors and founders alike. Here’s why.

Millennial Influence 

Half a century ago, our parents and grandparents weren’t honestly concerned about combining technology with parenting. However, today’s Millennials are far more data-driven than any other generation. The parent/tech combination is incredibly attractive to this group of individuals. 

That said, Millennials are a primary reason the FamTech industry is thriving. After all, 93% of Millennials own smartphones, and 100% use the internet daily. Other generations are benefitting from the Millennial’s demand, of course, but this particular generation won’t settle for less than a tech-supported parenting experience. 

BabyTech to FamTech

When many professionals became parents for the first time, they soon realized that very little technology existed that offered them a better way to parent. So, they started developing some themselves, beginning with sleep-training and milestone-tracking.

From there, new technology was unstoppable, and the market, once known as BabyTech, outgrew itself into what is now known as FamTech. According to Forbes, the US BabyTech market size in 2019 was close to $46 billion — and growing. 

Content Before Product Approach

Since 2013, nearly $500 million in funding has been pumped into FamTech companies. However, many founders are blazing marketing trails like never before. Traditionally, eager founders take a product-first approach and then support their product with marketing campaigns, such as advertising, content marketing, and more. 

When it comes to marketing for parents, company leaders turn the tables. Many soon-to-be founders grew a loyal audience for years through content marketing before ever mentioning a product instead of pushing products out first. This strategy is a more doable approach for busy parents doubling as entrepreneurs, and it’s a plan that undeniably hits the ground running.  

Who Do FamTech Companies Benefit? 

Naturally, FamTech is designed to support family life by making child-rearing easier for parents — but it doesn’t stop there. 


FamTech is a tech-savvy parent’s best friend. Many apps support healthy nutrition, offer vital connections, and help to track essential milestones. Gone are the days of “winging it” or penciling in feeding and changing times in a notebook. 

Nowadays, parents want this information at their fingertips, which is precisely what the FamTech industry tries to do. This approach relieves pressure on parents while creating an entirely new market in the meantime.


As mentioned, the US isn’t the most parenting-friendly country on the planet. Therefore, most parents struggle to cover their work responsibilities and parenting duties simultaneously. Childcare alone can burn massive holes in any parents’ pockets! 

What this stress and pressure often boil down to for employers is half-hearted employees nearing burnout. With the support that the FamTech industry has to offer, employers can benefit from more alert and involved employees. Parents who aren’t going it alone can be more present and content at their job. 


Nutrition, STEM education, sleeping, motor skills, and so much more are some of the elements FamTech addresses. From apps to gadgets to software, parents can be more engaged with their child’s development. This approach isn’t merely a parental relief; it’s benefiting those little bundles of joy, too. 


It didn’t take long for BabyTech to transform into FamTech. Any parent will tell you that parenting a newborn is just as scary as parenting a toddler. If there’s an app that can help you navigate that timeframe in life, most individuals will be all over that!

What’s more, is that family dynamics benefit from FamTech. Not only are moms and dads less stressed, but they’re also more on top of things when it comes to household duties. The whole family can relax a bit more, knowing that life isn’t a complete and utter whirlwind. 

What Risks Do FamTech Companies Face? 

Anytime a company deals with children, the dynamic creates a unique vulnerability. The “Mama Bear” and “Papa Bear” reality is undeniable, and no company management wants to get in the path of a troubled parent. 

Product Failure

That said, product failure is a significant concern for FamTech companies. No matter if it’s an app or software that’s tracking or training, parents expect it to work correctly 100% of the time. When a product fails, parents often go down with it, per se. 

Perhaps, parents get off-track with sleep training or can’t input specific information regarding feedings. It might seem like a small problem to an outsider, but walk in that parent’s shoes, and most people will be begging for a reprieve from the pressure. In other words, parents blame FamTech when they lose sleep and sanity because of product failure. 


As in any other tech-focused industry, FamTech faces a significant threat of cybercriminals. Malware or ransomware could crush a parent’s entire schedule and routine. If you think adults handle routine disruptions horribly, consider a baby or child’s reaction. Cybercriminals don’t think about that aspect of it, of course — but FamTech companies do.

However, managing cybersecurity effectively becomes a critical priority for FamTech companies when considering the substantial risks involved. With the average data breach incurring a staggering cost of approximately $4 million, understanding how to deal with risk in business becomes imperative.


FamTech offers parents plenty of variety in terms of what help it has to offer. While some apps or software guides parents to better understand sleeping techniques, others connect them to trusted specialists, such as lactation consultants. 

Also, some FamTech programs curate their content and offer it as guidelines within the program. For many parents, this information is the ultimate playbook. Any fraction of misinformation and both the parent and FamTech companies could land themselves in hot water.

Essential Coverage for FamTech Companies

Knowing some of the risks that FamTech companies face helps to understand what coverage is needed. Here are a handful of crucial insurance policies that work to safeguard FamTech company’s longevity in the industry.

Errors and omissions (E&O)

Also known as professional liability insurance, E&O steps in to protect you from lawsuits claiming that your product or service didn’t perform as expected according to the customer and industry standards. 

Cyber and Media Liability

This policy works to protect FamTech companies against third-party lawsuits that arise from digital activity. Cyber insurance also helps to cover fines and penalties from regulators.

Directors and officers (D&O)

Companies can indemnify their executives against covered claims and rely on a D&O policy for reimbursement. This coverage can defend the corporate entity as well as its leadership, too. This is the go-to policy to purchase when you’re pursuing rounds of funding.  

General Liability

We consider a general liability (GL) policy the firm foundation on which to build a robust commercial risk management plan. Without it, companies can quickly shutter due to the fundamental risks of merely operating a business. That said, GL coverage works to protect FamTech companies against third-party lawsuits of bodily injury, property damage, personal injury, or advertising injury.

Intellectual Property 

IP litigation is incredibly costly, so if your FamTech company holds a patent, IP coverage is a must. This policy protects the company and its IP in two ways. First, it provides legal defense costs. Second, it helps to cover the cost of enforcing your IP rights. 

Understanding the details of what coverage your FamTech company needs can be a confusing process. Founder Shield specializes in knowing the risks your industry faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.


Related Articles

fintech rules and regulations
April 11 • Risk Management

Fintech Rules: Regulations Finance Leaders Need to Know

Master the fintech rulebook! This post breaks down essential regulations finance leaders must understand to ensure their business operates compliantly in the ever-evolving fintech landscape.

fintech legal risks
February 29 • Risk Management

7 Legal Issues Every Fintech Should Avoid (and How to Diffuse Them!)

With the emergence of new and disruptive technologies, it’s no surprise that fintech legal risks abound for this innovative industry. Let’s break down these threats and provide solutions that will keep pace with the market.

leverage business insurance
February 27 • Risk Management

How to Leverage Your Business Insurance — 5 Tips

When was the last time you considered how to leverage your business insurance? It’s more than a safety net. In fact, this approach can give you a unique edge. Here’s how.

saas cyberattacks
December 11 • Risk Management

How SaaS Companies Can Avoid New Cyberattacks in 2024

Avoiding SaaS cyberattacks means teaming innovative technologies (like AI) with traditional risk management (like education) to stay ahead of the curve. We can show you how.

Legal Risks for SaaS Companies
December 5 • Risk Management

Top 5 Legal Risks for SaaS Companies in 2024

SaaS companies are on the forefront of innovation but face legal risks that leaders must understand. Here are SaaS risks to watch in 2024.

What Is a BOR Letter
July 27 • Risk Management

What Is a BOR Letter or Broker of Record Letter?

What is a BOR letter? Can it help you manage your specialized insurance solutions? We have the answers — and they may surprise you!