EXCLUSIVE: Bear Cave Founder Says Private Equity Daycare Scrutiny Is 'Long Overdue'

Caroline Ryan

Mon, August 31, 2026 at 2:30 PM EDT 6 min read

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

Private equity's growing scrutiny in the U.S. child care industry is "long overdue," according to Bear Cavefounder Edwin Dorsey,who says lawmakers should broaden their focus to include safety concerns at private equity-backed daycare centers.

"I think this scrutiny is long overdue, and I hope lawmakers also focus on safety issues at private equity-sponsored daycares," Dorsey said in emailed comments to Benzinga.

Dorsey's comments come as lawmakers examine private equity's role in child care and a new academic study offers a more nuanced picture of the industry.

Don't Miss:

A single bad hire can set a startup back years. Here are the 5 hires founders most often misjudge — and why
Still Learning the Market? These 50 Must-Know Terms Can Help You Catch Up Fast

The study found that private equity does not appear to be the primary reason daycare has become unaffordable. However, it found that 75% of private equity-backed child care centers are concentrated in just 5% of U.S. counties, particularly in markets where child care is already in short supply and in states with less stringent staffing requirements.

Bear Cave Raises KinderCare Safety Concerns

In April 2025, the Bear Cave published an investigation into KinderCare Learning Companies, alleging safety failures, including children being left unsupervised, escapes from centers, and allegations of abuse. KinderCare disputed the characterization, saying the incidents were isolated and that it investigates allegations, notifies families and relevant agencies, and terminates employees when warranted.

The report helped send KinderCare shares down 10.8%. The stock traded at $11.40 when the initial Bear Cave report was published.

A follow-up investigation in June 2025 shifted its attention toward KinderCare's finances, citing 103 Federal Trade Commission complaints obtained through a Freedom of Information Act request. The complaints included allegations that families using state childcare vouchers were billed for days when classrooms were closed.

Government subsidies represent a significant portion of KinderCare's business. The company reported $942.1 million in government subsidy revenue in 2024, accounting for roughly 35% of its $2.66 billion in total revenue.

Congressional Scrutiny Intensifies

The allegations have since drawn congressional attention. Rep. Anna Paulina Luna(R-Fla.) wrote to House leadership and the Department of Government Efficiency in May 2025, arguing that operators unable to keep children safe should not receive taxpayer funding.

"If you can't keep children safe—and worse, are complicit in their abuse—you do NOT deserve a dime of taxpayer funding," Luna wrote in a post on X.

Meanwhile, Sen. Jeff Merkley(D-Ore.) launched his own investigation in March into KinderCare and Learning Care Group, as well as their private equity owners, Partners Group and American Securities. Merkley accused private equity firms of prioritizing investor profits over the families and communities relying on child care services.

"Ensuring working families can access safe and affordable child care is paramount to building out the middle class and making it easier for families to get ahead. Unfortunately, private equity firms have increasingly brought their playbook to essential care industries—including child care—buying up independent providers, rolling them into large chains, and prioritizing investor profits over the well-being of the families and communities that depend on these services," Merkley said.

KinderCare Struggles As Debate Widens

KinderCare's stock has continued to struggle. Shares recently traded around $2.59, giving the company a market capitalization of roughly $307 million, far below its $7.68 52-week high.

The company's latest results offered little relief. KinderCare reported second-quarter occupancy of 68.6%, down 240 basis points year over year, while enrollment declined 4%. The company also expects to close 80 to 85 centers this year, according to the company's second-quarter results.

The controversy surrounding KinderCare is part of a broader debate over profit-driven health and care businesses. In June, Hunterbrook Media,which acquired The Bear Cave in July, alleged that understaffing at nursing-home operator Ensign Group saved the company roughly $161 million over five months.

As lawmakers continue to scrutinize private equity's role in child care, Dorsey's warning suggests the debate may extend beyond affordability and access to questions about whether cost-cutting at privately owned centers can come at the expense of children's safety.

For now, the growing congressional attention puts added pressure on daycare operators and their private equity owners to show that financial performance is not coming at the expense of the families they serve.

Photo: Credit: © Ryan Garza / USA TODAY NETWORK via Imagn Images

Read Next: Think you're saving enough for your kids? You might be dangerously off — see why

Building Wealth Across More Than Just the Market

Building a resilient portfolio means thinking beyond a single asset or market trend. Economic cycles shift, sectors rise and fall, and no one investment performs well in every environment. That's why many investors look to diversify with platforms that provide access to real estate, fixed-income opportunities, precious metals, and even self-directed retirement accounts. By spreading exposure across multiple asset classes, it becomes easier to manage risk, capture steady returns, and create long-term wealth that isn't tied to the fortunes of just one company or industry.

Arrived

Backed by Jeff Bezos, Arrived Homes makes real estate investing accessible with a low barrier to entry. Investors can buy fractional shares of single-family rentals and vacation homes starting with as little as $100 . This allows everyday investors to diversify into real estate, collect rental income, and build long-term wealth without needing to manage properties directly.

Qnetic

As electricity demand rises alongside AI, data centers, and renewable energy, long-duration energy storage is becoming increasingly important. Qnetic is developing a kinetic energy storage system designed to provide long-lasting, chemical-free electricity storage , offering investors exposure to the infrastructure supporting a more resilient and reliable power grid.

EquityMultiple

For accredited investors looking beyond stocks and bonds, EquityMultiple provides access to vetted commercial real estate deals starting at $5,000 , with only ~5% of opportunities passing their due diligence process.

FarmTogether

Farmland has historically held its value through market volatility and delivered returns uncorrelated to stocks and bonds. For accredited investors, FarmTogether offers direct access to high-quality U.S. farmland starting at $15,000 — fully managed, with no landlord headaches.

Fundrise

Private real estate and private credit can add income and stability to a stock-heavy portfolio. Fundrise offers access to diversified private real estate and credit strategies through an easy-to-use platform, with professionally managed portfolios designed to generate passive income and long-term growth.