Global market for female-focused health products generated $820.6 million in 2019, and is estimated to reach at least $3 billion by the end of 2030
The year 2020, also shudderingly known as ‘the year of COVID’ continues to spill out the innate deficiencies of human society. Especially, when it comes to our lack of depth in understanding human health and futile attempts at leveraging technology to tackle this public health crisis.
While this has been a recent pandemic, the nuanced asymmetry in technology for half of the world's population has ravaged human existence for a long time now. Well, if you haven’t guessed by now, we are talking about the less explored world of Femtech, with approximately 200 startups worldwide and a forecasted market value of $50 billion by the end of the next 5 years.
So What is Femtech, Anyway?
Throwing this word casually around the room is usually met with a couple of different reactions. But the underlying simple fact remains that almost nobody gets Femtech! Mostly, because the trip down this alley ends up in the mystical world of female health.
With time femtech has started to go beyond health and wellness. It also targets employment gaps, family planning, professional growth, e-commerce, etc.
FemTech aka “female technology”- is simply the umbrella-term. It applies to various types of software, diagnostics, products and services — in short, any solution that focuses on meeting female needs and solving their problems.
Femtech is not a niche industry, since it literally serves half of the human population. The term Femtech was officially coined only recently in 2013, by the Danish pioneer Ida Tin. Ida Tin and ex-Paypal Co-founder Max Levchin, are the pioneers in the genesis of Femtech with their fertility/ period tracking startups, known as Clue and Glow, respectively.
While this genesis story is not a common piece of the discussion, the investors of 2020 are keeping an eye out for a piece of the exploding Femtech market. After all, the entire market is set to reach a value of $50 billion by 2025, with a CAGR of 16.3%. It’s, therefore, no wonder that - about $750 million of VC capital flowed into Femtech last year. Elvie’s 42 million Series B, came out on top as one of the largest funding rounds by a female-led femtech startup. Even before COVID hit us all, startups such as Maven and Advantia Health raised $45 million each, just this year.
Off with the cloak of invisibility
While it is noteworthy that femtech has started to get a lot of attention, one can’t help but ponder about why Femtech's cloak of invisibility was cast away only recently, then?
Almost simultaneously, three things changed.
One, the glaring rise of the female-led economy. According to BCG, women’s control of investable wealth will amount to $72 trillion by the end of 2020, a little less than the total global nominal GDP, and as these women express their values through their portfolios, the impact will be felt within the investment industry in near future. This combined with the fact that women owned businesses are estimated to represent 40% of registered businesses worldwide in 2020 has led to what many call, the ‘she-conomy’.
Two, recognising that women as consumers are grossly underserved in healthcare, especially considering that women in different capacities make 80% of healthcare decisions in the U.S.A. They are also 75% more likely to use digital tools for healthcare, in comparison to the other gender.
Three, FDA & CE regulations approved use of digital apps for women’s health issues since 2016. From then on, digital apps are being widely used to manage women’s health. These three things combined with the entry of the likes of Clue and Glow forever changed the landscape of FemTech.
The Tech in Femtech
At the core of any innovative technology are patents that define and govern it. In Femtech, patents tend to play a far-reaching role. It’s been found that startups in Femtech with higher patent filing have access to higher levels of funding. There are obviously some outliers, but one cannot overlook the fact that companies in this space are creating new innovative technology - almost 11,300 patent families to be exact.
The recent surge of innovation has been in feminine hygiene, where innovative and sustainable alternatives to classic period care goods (sanitary pads, tampons - which hadn’t seen much innovation, since its invention in the late 1800s) are being developed. Such innovative technologies are being applied to not just period care goods, but to solve issues across the continuum of care of female health.
Femtech on Map
From a geographical perspective, these startups historically tend to be from the American and European subcontinent. However, there is a recent emergence and proliferation of Femtech companies in Israel, so much so that Israel now has more than half of current startups (107 to be precise) and $89 million of capital injection, just last year. In China, Femtech market demand is poised to exceed $2.5 billion by 2025. Africa with its nascent yet thriving ecosystem of players has given birth to a budding market. In a lot of these economies, Femtech is evolving to mean everything under the umbrella of general health and women’s overall wellbeing (professional and otherwise).
Femtech: India and the World
South Asia comprises 25% of the world's female population, therefore it's no wonder that Indian Femtech is going to be a sizable market, in the coming years.
Femtech startups in India are focused on designing better devices for gynecological/female health examinations or procedures (Niramai, Aindra, SmartScope CX), better menstrual hygiene products, addressing women's health issues, through mobile health (Pregbuddy, CareMother) and telemedicine tools (CelesCare). Some of them are even focused on issues that affect women disproportionately, such as career gaps and lack of social network spaces to safely share intimate issues (Oowomaniya).
Despite such great potential, the Indian Femtech ecosystem is nascent, the pipeline of potential investment stakeholders is not well defined and the investor confidence in the space is low. Not even 1% of global Femtech investment is being made in South Asia. To give a sense of the magnitude of the difference, Femtech space in the U.S.A receives 12x more funding and almost 13x more deal counts, than in India. India is thus still far behind, both in terms of total value ($123 million) of capital invested and the number of deals.
Apart from the investing ecosystem, creating awareness about Femtech products, especially in rural India remains a big challenge. This sluggish growth is further compounded by a reluctance to adopt new products, high cost, and in general, societal taboos. For instance, sanitary pads that have been a part of the western world for more than two centuries are being used by only 35% of women in India!
The reason this becomes important is that it directly feeds into the inherent investor bias, low levels of funding, and lack of structured ecosystem for Femtech. The concept of ‘I won’t fund what I don’t understand’ can be eliminated by creating channels of discussion, awareness, and education (PS: This blog post definitely counts as one).
Identifying and enabling growth factors that act as a propellant to the development of Femtech is hence crucial. A quick peek into the U.S.A Femtech market clarifies beyond argument that a combination of interest and active pursuit of technologies that tackle issues faced by women - both by the entrepreneurs, different entities of the investment community, and society as a whole, is a prerequisite for Femtech’s growth.
Initially, the VCs in all parts of the world too were hesitant to wet their feet, in this new pond - however, over the last decade, 365 VC investors have participated in Femtech deals globally.
Kleiner Perkins backed Progyny became the first fertility benefits management company to IPO, with a total IPO raise of $130million and a fully diluted market value of $1.3 billion.
An interesting development in the U.S.A investment space has also been the growth of VC firms with funds whose key focus is on Femtech. These include the likes of Golden Seeds, Portfolia, Astarte Ventures, Female founders fund, Rethink Impact just to name a few. They are enabling not only investment into Femtech companies, but are looking to create more opportunities for women to transform themselves into micro investors, who invest in companies whose solutions matter to all.
Perhaps, this is the answer we are seeking here in India, as well. An ecosystem of VCs, accelerators, entrepreneurs, angels who are forward-looking enough to serve the underserved half.
At the same time, it is also time to focus on the common population which includes uneducated women in order to take these products and services to every doorstep. Though the current market is still in its infancy, increasing awareness about the availability of these technology options, their applicability, and encouraging their adoption can take the Indian femtech industry to the next level.
This piece is contributed by Keerthana Sreekanth Rao