Population aging is one of the most significant forces shaping the U.S. and world economies.
Thanks to cumulative effect of medical, educational, and social advances, about half the people born in the U.S. after 2007 are projected to live to 100. (Average life expectancy has fallen in the U.S. over the past two years, primarily reflecting the ominous combination of the pandemic and opioid crisis.) The diversity of experiences among older adults living longer in the U.S. is wide with growing numbers working well into the traditional retirement years or starting new businesses, while many others struggle with economic insecurity and social isolation.
Like climate change, the demographics of longevity will broadly reshape the economy and society. “How do you prepare for a 100-year life,” says Susan Wilner Golden, director of dciX at Stanford Distinguished Careers Institute at Stanford University and author of Stage (Not Age).
Sounds like the kind of megatrend that would attract Silicon Valley venture capitalists and their peers in other innovation funding hot spots like Boston’s Route 128 and Austin’s startup scene. Venture capitalists have honed the art of funding disruptive ideas and entrepreneurs based on broad social, economic, and technological trends. Yet venture capitalists for a long time had a blind spot when it came to the business opportunities created by an aging population. “They thought everybody, say, over 60 or 65 is frail and elderly,” says Golden.
For example, among the participants at the 2017 Milken Institute Summit on Business and the Future of Aging was Seth Sternberg, a young successful Silicon Valley entrepreneur. He’s chief executive and co-founder of Honor, now the world’s largest elder care network and technology platform. He recounted to us how hard it was to raise seed money for their venture.
“Venture capitalists think the elderly and technology don’t work together. There is this psychological barrier in the industry,” Sternberg said. “The perception is: ‘Why invest in a product to sell to the elderly? They are going to age out.’ ‘I should invest in people with longer lifespans,’ they say. Yet very few teens stay with any product their whole lifetime, much less a year or more.”
Five years after that meeting, despite the recent valuation turmoil among venture-backed companies, the industry is increasingly coming round to the opportunities presented by the longevity market. “This is what’s new,” says Golden. “In five years from now, every venture fund will have a theme about the longevity market.”
Paving the way are firms like Primetime Partners formed in 2020 by longtime financier Alan Patricof and Abby Miller Levy, ages 85 and 45 at the time. Primetime backs new businesses focused on developing products and services targeted at an aging population. Other firms specializing in longevity investments include Generator Ventures and Magnify Ventures. Numerous well-known venture-capital firms are digging deeper into the longevity market. Venture firms are finding entrepreneurs with tech-based ideas that are innovative and scalable.
“The quality of the companies has gotten better.,” says Mary Furlong, age 73, founder of her eponymous firm and a longtime leader in the longevity market. The seeding of the business is better. The quality of the talent is better. Everything has gotten better.”
The pandemic may well represent the tipping point. The first few months of the pandemic everyone became aware of loneliness and social isolation among older people. Everyone became a caregiver of some sort or other, says Levy. There was also striking evidence that the stereotypical belief that older people couldn’t manage new technologies was deeply wrong with older adults readily using Zoom and ordering groceries online routine.
“The pandemic was a wake-up call for all entrepreneurs,” says Levy. “There has been a tremendous shift due to Covid. It’s an unanticipated by product of the pandemic.”
The longevity market is gathering momentum. Venture capital observers emphasize two factors that are still holding back even greater levels of investment. The first is the lack of billion dollar-plus unicorns that have been sold or gone public through an initial public offering, reaping the kind of lush returns that generates excitement among funders. However, there are a number of private startups like Honor and Papa (an elder-tech company that offers care and companionship to older adults) with valuations based on their funding success in recent years of more than a billion dollars.
Another impediment has been figuring out how best to get paid for longevity products and services. Many entrepreneurs found the hard way that the consumer-to-consumer business model was too expensive in many cases. Entrepreneurs are now more focused on creating relationships with Medicare Advantage plans and with corporate customers looking for eldercare type services to support their employees.
Perhaps most important is the lack of government innovation in the U.S., most notably by the federal government. Even a quick glance elsewhere reveals numerous government-driven longevity innovations, says Golden. Among them: Singaporean universities support their graduates job skills with lifelong learning; Japan embraced some two decades ago a comprehensive long-term care system that offers the elderly a choice of different care models; the Netherlands added to its mandatory universal long-term care system programs for the elderly to age-in-place; and New Zealand’s vocational education and training programs are open to all older workers and government backing is substantial.
In sharp contrast, U.S. policy makers have failed multiple times at building a universal comprehensive long-term care system and universal retirement savings plans. Efforts to improve Social Security with the aging of the population and the risk of a funding shortfall within a dozen years or so has gone nowhere. Most recently, President Biden rescued the climate change portion of his rejected Build Back Better legislation with the Inflation Reduction Act, yet much of the “caring economy” initiatives were jettisoned.
Increased longevity is an accomplishment to celebrate. But the demographics of an aging population demands major innovations by all sectors of the economy—business, government, and nonprofits—to take advantage of the opportunities created by the longevity economy. It’s good news that more venture capitalists are risking funds backing longevity entrepreneurs. But it is far from enough. Sadly, without greater government policy-making boldness innovations will fall far short of what’s needed or called for.