Femtech Is Becoming a $1B Industry
What Is Femtech?
Femtech is an umbrella term for software, diagnostics, products, and services that leverage technology to address women’s biological and medical needs. The term was coined by Ida Tin, founder of the period and ovulation tracking app Clue, launched in 2013.
So far, femtech hasn’t made the headlines as often or as spectacularly as AI or blockchain technology, for example. Probably because the femtech companies haven’t closed as many notable venture deals. Yet. Because that’s changing.
Femtech is focused on women’s health, and includes areas like fertility, pregnancy, nursing care, sexual wellness, menstrual care, and reproductive health. And while women’s health has not always received the attention it deserves, femtech is a sector that is growing rapidly.
Femtech Market Revenue Expected to Reach $1.1 Billion by 2024
According to predictions in a report by Frost & Sullivan, the femtech market revenue is expected to reach $1.1 billion by 2024, at a compound annual growth rate (CAGR) of 12.9 percent. In 2020 alone, the femtech industry has attracted over $376 million in venture capital. And not only is the sector as a whole snowballing; some of the largest exits in the last couple of years include companies such as Progyny’s IPO in 2019 ($130 million) and Bayer buying KaNDy Therapeutics in 2020 ($425 million). And the list of femtech companies receiving notable funding just keeps growing.
“It feels like investor interest has gone through the roof,” Jake Anderson-Bialis, co-founder of FertilityIQ and a former investor at Sequoia Capital, said to TechCrunch. “It’s three to four emails a day; people are coming out of the woodwork. It feels like somebody shook the snow globe here and it just hasn’t stopped for months now.”
A History of Underrepresentation
There are numerous factors that have contributed to why women’s health was for a long time a neglected area in science. One of them is misguided concern for women’s safety, which for a long time excluded women from many medical studies.
In 1977, the United States Food and Drug Administration (FDA) issued guidelines advising against the participation of women of “childbearing potential” in clinical research studies. To avoid the risk of medicines causing serious birth defects, women were simply excluded from a big part of all medical research. This was sometimes also justified by the idea that female bodies were just too complex due to fluctuating hormones.
New guidelines were then issued in 1985, to include more women in medical studies, but a big gender gap remained for many years. On analysing this gap, it became apparent that women were seriously underrepresented even in studies on the most common diseases such as heart disease.
It was not until 1993 that the FDA issued new guidelines through a section in the NIH Revitalization Act of 1993, named Women and Minorities as Subjects in Clinical Research.
This example tells the story of the US, but the same pattern of underrepresentation is prevalent all over the world. And not only have women often been excluded from medical studies. Areas concerning women’s health have often been ignored, underfunded and considered less important.
An often cited example of this research gap comes from the UK where five times more research was made on erectile dysfunction, which affects only 19 percent of men, than into premenstrual syndrome, which affects 90 percent of women.
Luckily, we are now starting to see some true change. As a new generation of female entrepreneurs enters the medical technology sector, things are finally starting to move.
Will Femtech Reduce the VC Gender Gap?
But not only is there a historical gender gap in medical research. There is also a wide gender gap in the world of venture capital. In 2019, less than 3 percent of VC investments went to companies led by women. Only 20 percent of U.S. VC was allocated to startups with at least one woman on the founder team, and the average size of VC deals for female-founded or female co-founded companies was less than 50 percent of what all male-founded startups received.
If we add in the variables of race and ethnicity, the figures are even worse. Black female founders have received only 0.6 percent of the total VC funding raised since 2009, and Latinx women founders only 0.4 percent of the total investments. Perhaps the rise in femtech will help alter this imbalance.
One of the companies paving the way for others in this sector has definitely been Cora. There are probably some people who never thought venture capitalists would funnel millions into tampons and menstrual pads, but suddenly they are, and the period care company Cora is among the happy recipients of that cash.
“Investors have realized there is a huge pent-up demand in the market for healthier products for women,” said Cora co-founder Molly Hayward to TechCrunch. “The way in which the VC world is structured, there just has not been a lot of representation. It’s really difficult to understand the value of a product you aren’t ever going to use or to understand a problem you aren’t ever going to have, particularly around period care. This isn’t something we were talking about as a society five years ago.”
Exciting Times Ahead
Elvie is a startup developing femtech hardware that recently announced its third round of private financing, securing a $42 million Series B investment. Elvie’s innovative product portfolio includes a silent wearable breast pump and a smart pelvic floor exerciser. And not only has this company raised money; it has also helped start the important conversation around issues like pelvic floor health and breastfeeding in public.
“When you create a new category, you have to educate the market and you have to change the conversation… I think it’s really an exciting moment for femtech… The tech sector is waking up to the importance of the female consumer,” said Tania Boler, CEO of Elvie, to TechCrunch.