'Femtech' funding – challenges and opportunities

'Femtech' is the somewhat controversial catch all term used to describe digital products, services and diagnostics relating to health issues experienced largely by people assigned female at birth. 

Aimed at a wide spectrum of the market from end-users and consumers to Big Pharma players, the funding needed to bring femtech to market is often surprisingly hard-fought. Founders have faced some systemic challenges to securing investment, despite the obvious benefits femtech products can bring to health management. 

Lack of investment

The consensus is that the lack of investment in femtech is due to the difficulty in getting capital to female entrepreneurs who are often the drivers of femtech. This is hard to understand given:

• women spend 29% more per capita on healthcare than men
• women are comparatively more active in the healthcare industry as primary caregivers with 89.3% of nurses identifying as women 
• 75 - 85% of women are more likely to use digital tools for their healthcare needs compared to men, and 
• between 25 - 45% of people assigned female at birth are estimated to suffer from a complicated and chronic condition such as endometriosis. 

These statistics alone should make a persuasive case for the future of femtech which is estimated to be a $50 billion industry by 2025, yet on the ground we are seeing a real lack of engagement from investors. 

The lack of women at executive level of companies or venture capital firms is pointed to as one of the main reasons for lack of investment in the industry. Only 12% of decision makers and 2.4% of partners at VC firms are women and, while this is a generalisation, it seems that the largely male partners are less interested in buying into femtech. Whether it's the products themselves or unconscious bias against businesses led by women, is hard to extrapolate from the data, but femtech founders have been candid about the struggle to raise capital to back their products and services. 

Crunchbase figures show that a meagre 2.8% of VC funding went to women-led start-ups in 2019 and that fell to 2.3% in 2020. This dip can, to some extent, be explained by the effect of the pandemic on investors' risk appetite, but the same evidence also suggests that women-led start-ups financed by all-male VC firms are less likely to reach a successful acquisition or IPO. 

Analysis from Pitchbook shows that only six femtech exits were completed in 2019. Circular thinking allows potential investors to cite the lack of sizable exits as a deterrent to investment. Pitchbook predicts that 14% of VC will be given to women-founded start-ups this year (noting that only 17% of start-ups have at least one female founder). The challenge for femtech founders is to show the investment community that you can "make money while making a positive impact on women's health". 

Underdevelopment in femtech is also said to stem from the lack of research and development dedicated to the area. We already know that women spend more on healthcare and medical expenses yet only 4% of research and development is dedicated to women's health issues. 

The future is bright 

It's not all bad news and there are some roaring success stories. London-based Elvie secured £58 million in a Series C funding round. Femtech is no longer a necessarily led by or oriented towards women, or considered 'niche'. Many are predicting that there will soon be a shift from a focus on fertility and reproductive-related products with an opportunity for femtech players (and new market entrants) to tackle other issues such as diseases which largely affect women. 

Another opportunity for femtechs is to widen the audience scope of their current offering, targeting others within the LGBTQ+ community and explicitly including trans and non-binary people (as many femtech products do already) to help bridge the healthcare access gap which is often felt disproportionately by members of these communities. In addition, AI and cloud-based informatics are contributing to an environment where personalised medical products are more accessible. 

Femtech is a space to watch and that there are multiple factors which contribute to a market conducive to growth. Tania Boler, CEO and founder of Elvie, said: "Elvie has already revolutionised every category it has entered – but we know that we have barely scratched the surface of what is possible for women’s tech". Tech investors can no longer ignore it.

Find out more

To discuss the issues raised in this article in more detail, please reach out to a member of our Life Sciences & Healthcare team.