Female technologies catering to women’s health and wellness (more commonly known as “Femtech”) is hot, and it’s moving beyond the fertility tracking apps that defined the category in its early stages. The category now encompasses pregnancy and maternal care, sexual health, chronic disease, amongst others. “Menotech”-innovations to improve menopausal and perimenopausal lifestyles was identified by advertising agency Wunderman Thompson as a 2020 trend to watch. And the support of celebrities such as Gwyneth Paltrow has further raised visibility for this sector.
Despite the enthusiasm for this sector, the sector remains an undeveloped area of healthtech with only 4% of healthcare R&D going towards women’s health, according to TechCrunch. Despite reports indicating the sector’s anticipated growth back in 2017, both funding numbers and proportion of total funding in Femtech has been on decline since then. According to analysis from Rock Health, Femtech funding declined to 3.3% in 2019. And while average deal size in Femtech grew between 2013 to 2018, it has held relatively constant during the past few years.
The dearth of investment in femtech startups has been linked to the difficulty of getting capital to female entrepreneurs. Crunchbase figures show that in 2019, 2.8% of VC funding went to women-led startups; in 2020, that fell to 2.3%. Furthermore, evidence suggests that female-led start-ups financed by all-male VC firms may drastically reduce the probability of a successful exit (either via acquisition or an IPO). The challenge is far from easy to solve. As Melinda Gates put it, “We like to think that venture capital is driven by the power of good ideas. But by the numbers, it’s men who have the keys”. Femtech founders, in particular, talk about war stories of how difficult it has been to convince male investors of women’s health needs.
What It Takes To Go Mainstream
1. Build a Pipeline of Femtech Entrepreneurs
The femtech industry consists of about 200 startups worldwide, of which 92% are founded and led by women, according to recent reports. Compared to the 12,000 fintech startups in operations today, femtech startups are still a small minority. Building a pipeline of potential femtech startups is a first step. One way to help support and enable promising business ideas is through startup accelerators.
A handful of accelerators dedicated to Femtech have been launched around the world during the past two years, all offering a combination of networking, mentoring, and introductions to potential investors. Examples include Station F in France and AXA Femtech Accelerator. And as of this week, femtech startups have an additional option to consider: the Tech4Eva accelerator in Switzerland. Launched by Swiss health insurer Groupe Mutuel in partnership with the École Polytechnique Fédérale de Lausanne (EPFL), Tech4Eva aims to foster and support innovation in women’s health. Nicolas Loeillot, Chief Innovation Officer of Groupe Mutuel explains, “Prevention is the future of health insurance as it can significantly reduce health costs, which are becoming unbearable in Switzerland and elsewhere. If we improve women’s health, we have a positive impact on more than half of the Swiss population.”
2. Femtech as a viable investment opportunity
Pitchbook analysts have suggested that investors have not been convinced of the category because of a lack of “sizable exits.” According to this analysis, only six femtech exists were completed in 2019, although this represented a 64% increase in value compared to 2018. With that said, Pitchbook also points to several fundraising deals that were completed in 2020, such as Maven Clinic’s $45M Series C funding, and Kindbody’s $32M Series B funding. And as the VC world becomes more diverse and with the wide-spread recognition that preventive health and personalized medicine, analysts believe that VCs will see femtech as a viable market opportunity.
3. Enlarging the scope
Another avenue to accelerate Femtech is to expand the current scope and to actively serve different subsegments of the female population. According to RockHealth, some spaces ripe for innovation include providing care for queer and transgender communities and sexual education for young women, particularly those of color.
Over half of LGBTQ+ identifying individuals report facing discrimination while seeking medical care, leading to greater care avoidance. Given that an increasing number of women are identifying as LGBTQ+ in the workplace, RockHealth suggests that there is an opportunity for Femtech companies to fill the gap and meet the needs of this community.
Another RockHealth proposal is to look at providing sexual education for adolescent and young women of color in the United States. Women of color are projected to be the largest demographic of US women by 2060. Given that disparities in sexual health education mainly impact women of color, there is a meaningful need for Femtech to work on closing this gap.
Femtech, while still an emergent sector, has potential to expand and grow in 2021. With half of the world’s population as its market, it’s about matching the right solution to the need and bringing it to scale.