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Investors ignore a huge subsection of technology because it’s considered “taboo” — despite the fact that it’s set to be worth $1 trillion by 2027.
The FemTech sector includes all innovations designed to solve health problems experienced by women individually, differently or disproportionately. It covers everything from health during pregnancy and menopause to Alzheimer’s and HIV.
Women make up over 50% of the world’s population, which means the target market for products focused on their health is massive. But only 3.3% of investment in digital health in the United States went toward women’s health between 2011 and 2020, according to digital advisory firm Rock Health.
The benefit of nurturing innovation in women’s health is not limited to women.
Research by Women’s Health Access Matters, a nonprofit organization focused on funding women’s health research, indicates that investing $300 million in improving women’s health could generate about $13 billion for the global economy.
Research by Women’s Health Access Matters indicates that investing $300 million in improving women’s health could bring in about $13 billion.
De Agostini Picture Library | De Agostini | Getty Images
“The opportunities and value creation potential for investing in this area is enormous,” Karen Taylor, director of research in the Health Solutions Center at Deloitte, told CNBC.
“So I think if there was a little more homework done by some of these investors, they would understand why this is a good area to grow and invest in.
“They didn’t really get it.”
Tania Puller created Elvie, a tech company focused on women’s health, in 2013 after finding a shortage of products designed for new moms. Elvie’s main products are pelvic floor trainers and portable breast pumps.
But not everyone took her new job seriously.
“Quite frankly, the tech industry thought it was a joke,” Puller told CNBC.
“They didn’t really get it…[and]on quite a few women’s health issues, the problem is that because there’s a lack of education, there’s a lack of demand. From an investment standpoint, it’s not clear what the thesis is,” Bowler said.
A personal understanding of a product is often key for investors, but statistics show that most investment decisions are made by men. Report 2022 By European Women in VC, a group of leading venture capitalists, found that only 15% of VC partners were female.
Despite the roadblocks, Elvie has made great progress. It is now one of the largest companies in the FemTech space with revenues of $100 million. There are examples of women who have run marathons and had surgery while expressing milk with Elvie pumps, which CEO Tanya Boller said highlights the human impact of investing in women’s health.
“We went in with a very strong message about empowerment, but at the same time we’re dealing with the taboo head-on, we’re not ashamed of it. And that’s the beginning of the conversation,” Boller said.
The lack of understanding of women’s health – and the importance of women-specific health solutions – has deeper roots.
“Because it was such a taboo topic, it’s really hard to beat,” said Valerie Evans, consumer investor at venture capital fund The Craftory.
“Not because (investors) don’t want to know and not because they’re willfully ignorant, but I think it’s a general societal problem that permeates the investment world.”
And although the number of female investors is limited, the gender balance within company teams can also affect how difficult it is to get support.
“Being an angry feminist didn’t work.”
More than 70% of FemTech companies have at least one organization, compared to an average of 20%, according to McKinsey & Company.
But that means the odds are stacked against them.
Less than 3% of venture capital funds went to female-led startups in 2020, according to data from INSEAD business school, while female entrepreneurs are 63% less likely to receive venture capital funding than men.
Female founders also generally ask for less money from investors than their male counterparts, which could hurt their prospects in the space, Deloitte’s Taylor said.
“There’s a lot of research that shows that women tend to be more honest and underestimate what they think is the potential for their innovation,” she said. “Guys are notorious for big sales, and investors are used to it.”
Economies will grow when women can give birth and not die in the process
Brittany Barretto
Founder and CEO of FemHealth Insights
For Brittany Pareto, founder of analytics platform FemTech FemHealth Insights, these numbers underscore the importance of startups relaying accurate data to investors — so if they can’t solicit personal expertise (because venture capitalists are men), they can provide solid information.
“It was very important that we stick to the data part of all of this because if we’re just angry feminists, it doesn’t work yet. So I was like: Let’s be scientists and let’s be entrepreneurs,” Pareto said.
The FemTech sector is growing at an amazing rate. More than 60% of FemTech startups were founded in the five years leading up to 2022, and there has been a 1000% increase in the number of companies in the space over the past 10 years, according to FemHealth Insights research.
These growth rates – despite myriad obstacles – are encouraging for an industry that has been struggling to gain momentum.
“I’m incredibly optimistic about the future of women’s health,” Pareto said, emphasizing the enormous potential benefits to the world.
“The economic potential for countries if they can empower women to feel better, live longer, and live with more mobility?” She said. “Women have money. Economies will grow if we make women healthy.”
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