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FemTech Startups’ Uphill Battle For Funding

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In the dynamic world of technology startups, FemTech—a sector dedicated to women’s health innovations—stands at the forefront of transformative change. Yet, behind the scenes, female founders in FemTech face a daunting challenge: securing the necessary funding to drive their groundbreaking ideas forward.

From investor biases to market misconceptions, FemTech startups grapple with a myriad of obstacles that hinder their access to capital. Despite the sector’s exponential growth and the prevalence of female-founded ventures, the journey to funding remains an uphill battle.

One of the key issues plaguing FemTech fundraising is the perception of an oversaturated market. Investors often struggle to differentiate between various FemTech solutions, leading to skepticism about the sector’s potential. Moreover, there exists a pervasive stigma surrounding female founders in FemTech, with their ventures often dismissed as passion projects rather than serious endeavors.

Anya Kern, Co-Founder and Anastasiia Timon, Founder & CEO at Blooming Eve mention, “Not fitting into an existing VC box: investors have difficulty distinguishing different FemTech solutions, which often leads to the perception of an oversaturated market. In fact, most of the solutions either target different customer segments or have a totally different business model.”

Compounding these challenges is the lingering belief that FemTech is a niche market with limited growth opportunities. This misconception, coupled with the gender disparity in the venture capital landscape, creates a formidable barrier for female founders seeking investment.

Despite the undeniable market potential and the demonstrated success of women-led startups, FemTech companies continue to receive only a fraction of the funding allocated to their male counterparts.

Sylvia Kang, Co-Founder and CEO at Mira, adds, “70% of startups in the FemTech sector are female-founded. Despite this fact, male-founded femtech companies tend to raise much more capital. On average, female-founded FemTech startups have raised $4.6 million, compared to $9.2 million by male-owned companies.”

Elina Valeeva, CEO & Co-founder at Essence app underlines, “Female-founded startups currently raise <3% of all VC funds across the board, despite rising representation of female founders overall, currently around 15%, and research showing that women-led startups outperform those led by men.”

The lack of female investors capable of writing substantial checks further exacerbates this funding gap. Gina Bartasi, Founder and Executive Chairman, Kindbody, mentions, “Not enough female investors who can write multi-million dollar checks. There are more female investors, but very few are General Partners of funds capable of writing a $5M+ check.”

Elina adds, “We know that women raise less money than men. We know that most FemTech companies are founded by women. We know that investors prefer to invest in topics they can easily relate to (spoiler alert: not women’s health). Therefore, a female founder raising capital for a FemTech company faces a massive uphill climb. You’re a female raising capital – strike one. You’re a female raising capital in FemTech – strike two. The odds are stacked.”

Moreover, the dearth of research and data on women’s health conditions stifles innovation in the FemTech space, limiting the development of groundbreaking solutions that could attract investor interest.

Marina Davidova, Managing Partner at DVC, explains: “FemTech is a relatively new category with few success stories, and the market lacks established players that could offer a secure exit strategy for VCs through mergers and acquisitions (M&A) or acqui-hires. Consequently, even VCs who grasp the market’s potential might hesitate to invest. I had the privilege of collaborating with Flo in their initial stages, and it was evident that many mainstream VCs didn’t take them seriously at first. Nonetheless, kudos to our colleagues at Palta and Flint Capital who recognized the opportunity and made a wise investment.”

Overcoming Investor Bias in FemTech

In the dynamic world of FemTech, where innovation intersects with women’s health, securing investor interest is often a challenging endeavor. While some investors readily embrace the potential of FemTech, others remain skeptical, hindered by biases and a lack of understanding of the sector’s nuances.

Anya and Anastasiia from Blooming Eve highlight the pivotal role of personal connection in garnering investor support. At a pitch event, despite encountering male VCs unfamiliar with women’s health, their personal experiences with infertility bridged the gap, leading to a thumbs-up for their FemTech idea. This underscores the importance of women sharing their health stories to pique investor interest and drive change.

“Women sharing their health stories with male counterparts is what brings interest to FemTech. Be the voice of change.”

Gina echoes the sentiment, acknowledging past encounters with investor misunderstanding. Many investors, both male and female, struggle to grasp the complexities of FemTech, resulting in a lack of support for solutions addressing women’s fertility challenges. As Mira’s experience illustrates, investors’ unfamiliarity with female hormone fluctuations and ovulation prediction issues hinders their ability to comprehend FemTech’s potential impact.

Sylvia Kang emphasizes this point further, citing investors’ difficulty in understanding female hormone fluctuations and the limitations of traditional ovulation prediction kits.

“For example, investors often struggle to understand female hormone fluctuations and why traditional ovulation prediction kits may not work for them. Our survey showed that more than 90% of Mira customers believe over-the-counter ovulation kits were not helpful for them. However, investors don’t seem to pay attention to or try to understand such issues.”

The path to FemTech funding is fraught with challenges, exacerbated by investor biases and a dearth of understanding of women’s health issues. However, these obstacles underscore the importance of advocacy and education in reshaping investor perceptions and driving investment in FemTech.

A New Era in Healthcare is Underway

In the ever-evolving landscape of women’s health, signs of progress and promise abound, signaling a pivotal moment in the trajectory of FemTech. From the emergence of unicorn-status companies like Maven, Carrot, and Kindbody to the Biden administration’s renewed focus on supporting women’s health research, the tide is turning in favor of elevating women’s health to the forefront of healthcare discourse.

Anya Kern, co-founder of Blooming Eve, underscores this optimistic outlook, noting the growing recognition of women’s health as a serious priority. With male investors displaying eagerness to invest in FemTech, there’s a burgeoning acknowledgment of the vast potential of solutions addressing women’s unique health needs.

“I think we are on a good trajectory for women’s health finally being considered seriously,” says Anya.

Sylvia Kang highlights the escalating momentum behind FemTech, citing the surge of female-led health-tech companies and the mounting consumer demand for personalized health solutions. Despite persistent challenges, such as funding disparities and institutional barriers, FemTech is gaining traction and recognition for its transformative potential in addressing women’s health concerns.

“We’re definitely in a new era of healthcare and putting a big focus on women’s health,” says Sylvia. “I’ve seen a new Carta’s report, there is a rise in female-led health-tech companies. I do believe that we are in the era when women create more for other women.”

Elina Valeeva offers insights into the policy landscape, pointing to the Biden administration’s landmark Women’s Health Research Initiative as a significant stride towards advancing gender-specific health research. While past efforts have fallen short, the renewed commitment to women’s health signals a promising shift in federal priorities, albeit with cautious optimism for tangible outcomes.

“This represents a growing recognition of gender-specific health needs at the federal level in the United States,” explains Elina. “The only issue is that we’ve seen these types of leadership actions in the past, and now we’re watching to see if this administration will be able to make good on their promise.”

Marina Davidova adds, “We are living in an incredibly exciting era for FemTech. Several significant trends are converging: wearables are generating extensive data for analysis, and AI has evolved beyond merely identifying patterns in this data. It is now capable of serving as a personalized health advisor for every woman, thanks to advancements in large language models. The rise of AI-driven FemTech projects, such as Flo and Essence, is also catalyzing significant progress in the science of women’s health. Prior to 2016, the most extensive research on menstrual cycles involved just a few thousand participants. Now, researchers have access to clean, structured data from a diverse sample of tens of millions of women. This is truly a remarkable development.”

Rosana Rabines, Managing Parner, GWP Impact, further elucidates, “After COVID, we’re seeing a new era in healthcare with increasingly empowered patients demanding more from the healthcare system. They’re equipped with information from their wearable devices and are aware of the systemic gaps and biases affecting their health outcomes. It’s only natural that women, in turn, would demand and work to build better tools focusing on their healthcare.”

Amidst the challenges and triumphs, FemTech is poised to redefine women’s healthcare, fueled by innovation, advocacy, and a collective commitment to revolutionize the future of women’s health.

Strategies for Pitching Women’s Health to Male Investors

In the high-stakes world of fundraising, navigating the nuances of pitching women’s health innovations to male investors requires finesse and strategic savvy. From leveraging data-driven approaches to challenging existing narratives, founders must employ a multifaceted approach to capture the attention and support of male investors.

Anya and Anastasiia from Blooming Eve advise researching investors and their past investments: the stage, thesis, whether they have invested in similar companies before, and if they have invested in at least one female founder.

“Don’t waste time on VCs that haven’t. Additionally, crafting the pitch in terms of numbers, opportunity, and traction can help make it more attractive to male investors. Storytelling and looping in their personal experience is always helpful as well. Male investors have females in their lives, so try to circle back to their personal experiences.”

Gina Bartasi advocates for a pragmatic approach, emphasizing the significance of focusing on data. She believes founders don’t need to get creative but should instead use data, TAM, and IRR – things that matter to investors regardless of gender.

Sylvia from Mira underscores the power of storytelling in capturing investor interest, urging founders to distill complex health issues into relatable narratives. By leveraging visuals, anecdotes, and testimonials, founders can make their pitch memorable and emotionally resonant, emphasizing the transformative potential of their innovations.

“When fundraising, get creative with storytelling — use visuals, anecdotes, and testimonials to make the pitch memorable and emotionally resonant. Remember, everyone who you will be talking to has a woman in their life. Let their wife, sister, girlfriend, or daughter test your product. The goal is to present the invention and illustrate it as a transformative solution addressing a significant societal need.”

Rosana, Managing Parner, GWP Impact, highlights, “When pitching to male investors, I often recommend my founders start by establishing the market potential of their solution and their credibility as a founder. It’s natural for femtech founders, like most healthtech founders, to start with a personal anecdote about the problem they’re working to solve. These anecdotes, though emotionally compelling, can lead to the investor making implicit assumptions about the market sizing. By starting with the business case, femtech founders break through common misperceptions around the niche nature of the sector.”

Elina adds, “A male investor once commented that the reason women’s health is important is because men’s health depends on it. The only way he could view our startup was how it related to his own lived experience as a man. There’s a twisted ironic truth to his statement. Usually, investors invest in topics they can easily relate to and understand. Women’s health is often framed in relation to its impact on men’s health, rather than being recognized as a valuable and essential entity on its own. We need a paradigm shift because women’s health is inherently valuable, deserving attention, investment, and development for its intrinsic worth. We must dismantle the narrative that positions women’s health solely as a means to an end for men’s health.”

In navigating the fundraising landscape, founders must arm themselves with a diverse arsenal of strategies, from data-driven pitches to compelling storytelling and a steadfast commitment to challenging outdated norms. By embracing innovation and resilience, founders can unlock opportunities and drive progress in the dynamic field of women’s health entrepreneurship.

Is FemTech Still Considered a Niche Investment Opportunity?

Anya underscores the challenge of investor bias, noting that most investors are men who tend to gravitate towards founders who resemble them, both physically and experientially. This tendency can create a barrier for female founders seeking support for their innovative FemTech solutions.

Gina adds, “It’s challenging because investors have not seen enough successful exits. The funding mentality has changed dramatically in the last couple of years from believing it’s niche to enormous now.”

Sylvia provides a glimmer of hope amidst the challenges, citing promising trends in FemTech fundraising.

“I wouldn’t say that women’s health is still a niche investment opportunity. There are some positive trends in FemTech fundraising. Despite the difficulties, women’s health companies are experiencing a notable positive shift.

The average deal size for these companies reached an unprecedented high of $10.4 million. On top of that, in the year 2023, women’s health companies secured 4.3% of the $26.5 billion total venture capital invested in startups categorized as “health” or “healthcare,” according to PitchBook Data. It marks the highest proportion of venture capital allocated to women’s health companies in the last five years and shows a 59% increase over the year.

We are also finally getting support from the government and the White House Initiative on Women’s Health Research, which will be in force in 2024.”

Elina emphasizes the persistent perception of FemTech as a niche investment opportunity, attributing this to outdated stereotypes and misconceptions about women’s health.

“I spoke with fellow founders working on topics such as orthopedics or elderly care, and I asked whether their investors considered their topics to be “niche,” and none of them had this experience like I have as a FemTech founder. So based on this, investors still see FemTech as a niche opportunity.”

Is There a Problem with the Term FemTech?

The discussion surrounding the terminology used to describe technology targeting women’s health underscores the need for precision and inclusivity in the industry’s language. Anya suggests that broadening the scope to “digital health” can attract a wider range of investors, emphasizing the importance of framing FemTech in a context that resonates with diverse stakeholders.

“Yes, calling it digital health helps to broaden the perspective as well as the range of investors to talk to.”

Marina, Managing Partner at DVC, mentions: “I strongly advocate for the term ‘health tech.’ Labeling it uniquely offers no clear benefit and may even alienate investors. Consider our portfolio company that develops prostate cancer treatments—they don’t brand themselves as ‘maletech.”

In contrast, Gina advocates for retaining the term “FemTech,” highlighting the distinct health needs and experiences of women that have historically been overlooked in healthcare.

“It does need to be called FemTech because women are very different in healthcare than men. For too long, women have been thought of as small men, rather than different human beings. In biotech and drug discovery, it’s been proven that women metabolize drugs differently than men, and that’s just one example. There are tons.”

Rosana agrees, “I love the term Femtech because it increases awareness about how underserved women are by traditional healthcare systems for both investors and the public. It has created an ecosystem of support for femtech founders, and the opportunity for femtech funds with more specialized investment theses.”

Acknowledging the potential limitations of the term “FemTech,” Sylvia Kang, proposes a nuanced perspective, emphasizing its role in addressing a broad spectrum of health issues affecting women. By expanding the focus beyond reproductive and sexual health, she advocates for a more inclusive approach that addresses the diverse healthcare needs of women across different life stages and conditions.

“Women make up 50% of the world’s population, so FemTech is defining technology built for half the global population. However, it’s often perceived as a niche geared towards white cis, economically privileged women. Others say it’s not inclusive. I think this concept is outdated and wrong.

Another problem is that FemTech is often perceived as technology focusing on women’s reproductive and sexual health. It is true that most of the FemTech companies (37% according to the report) address reproductive and maternity health, but they are not limited to these conditions.

Recent McKinsey research shows that sexual, reproductive, and maternal health make up only 5% of women’s health burden, with 56% of the burden coming from other health conditions that are more prevalent in women, like depression, headaches, and autoimmune diseases. This 56% is also a target for FemTech companies. So when it comes to convincing investors, you have to keep in mind that you pitch technology solving problems of half the world population, and not a mere group of privileged women.”

Elina echoes the sentiment that “FemTech” serves as a necessary descriptor for technology tailored to female-specific health concerns.

“So far, “healthtech” equals “mentech.” Society, research, and the medical community continue to overlook women’s needs. Women are still just a feature, while men are the default. In our work on Essence, I’ve found that the term “FemTech” helps accurately represent our focus on female-specific health issues and the need for tailored solutions.”

Overall, the debate surrounding terminology underscores the complexity of framing women’s health technology in a manner that is both accurate and inclusive. While different perspectives exist regarding the most appropriate terminology, the overarching goal remains to advance technology solutions that address the diverse healthcare needs of women globally.

The Key Challenge for FemTech Development

The femtech industry faces multifaceted challenges that hinder its growth and innovation. Anya from Blooming Eve highlights the lack of governmental and public support as a significant barrier. Gina from Kindbody emphasizes the need to create more wealth for women to enable their participation in investment and funding ecosystems.

Sylvia, Co-Founder and CEO at Mira, identifies a critical issue of public awareness and understanding surrounding women’s health, noting that many women are unaware of hormonal imbalances and their impact on various health conditions. This lack of awareness, coupled with insufficient research and investment in female healthcare, perpetuates a cycle of underresearch and underinvestment in the sector.

“I believe that the key problem lies in a lack of public awareness. According to Mira surveys, women don’t know much about hormones and don’t recognize that many health conditions might be connected to hormonal imbalances. Since medical professionals also lack research and clear guidelines, they often cannot provide an effective treatment plan to treat these conditions. According to the latest McKinsey report, the women’s health gap equates to 75 million years of life lost due to poor health or early death per year.”

Furthermore, Elina, CEO & Co-founder at Essence app, underscores data privacy concerns and societal norms as additional hurdles to femtech advancement.

“Data privacy concerns, particularly in the post-Roe USA, create huge apprehension among women about the potential misuse of their sensitive information. This fear is amplified by instances where women’s health data has been mishandled, serving as a deterrent to innovation in the FemTech sector. Even in developed countries like the US and EU nations, such as Poland, where abortion rights are limited, societal norms further complicate FemTech development by reinforcing conservative attitudes. Overcoming these multifaceted challenges requires a holistic approach that not only addresses financial and regulatory aspects but also strives to break down societal barriers and foster open conversations about women’s health.”

Normalizing Taboo Topics

Promoting open discussions about women’s health is pivotal for dismantling societal taboos and fostering a deeper understanding and acceptance of women’s unique health experiences. Anya emphasizes the importance of women leading the conversation and encouraging dialogue with men, starting from influential figures within families and communities. By normalizing discussions about female anatomy and health experiences, we can educate men and cultivate a more supportive environment.

“We, as women, should talk more comfortably about this, not only among ourselves but with men, too. It is especially important for women in power and women talking in their families. My little niece, 8yo, is using the word “vagina” as part of her body with no extra layer of awkwardness. It is quite polar of what my generation of millennials were raised by. Then, men will start talking about it. They don’t know what’s happening with our bodies unless we tell them.”

Similarly, Gina’s call for increased public discourse on women’s health issues, such as menstruation and menopause, resonates deeply with efforts to destigmatize these topics. By openly addressing these matters, we challenge societal norms that perpetuate silence and shame surrounding women’s health, creating space for more inclusive and informed discussions in both private and public spheres.

Marina’s suggests, “A promising approach is to collaborate with online creators and influencers, leveraging their platforms to normalize discussions on these topics.”

Sylvia’s focus on normalizing discussions about women’s health in the workplace sheds light on a crucial yet often overlooked aspect of health education. Despite the significant impact of menopause and other health issues on women’s professional lives, these topics are often sidelined due to stigma and discomfort.

“We need to be clear when talking about women’s health topics like periods, menopause, chronic pain, pregnancy complications, and postpartum challenges. I can see these topics taking over social media and the headlines of the largest media outlets, which is a good sign for me.

However, there is a still a room to improve, especially when it comes to discussing such topics at the workplace. Our recent study showed that 75% of women going through menopause, prefer not to discuss it at the workplace. These statistics speak for themselves, considering that menopause symprotms significantly impact 2 in 5 women at work.”

At Essence, Elina focuses on normalizing menstruation in the workplace through innovative solutions like AI hormonal cycle-based scheduling.

“We focus on normalizing the taboo topic of menstruation in the workplace. A recent UK study found that more than two-thirds of women have bad work experiences due to their periods, and over 90% of women and people with cycles suffer from cycle-related pain, yet a staggering 95% lack access to workplace resources to manage these issues effectively. They’re not telling anyone about it due to the stigma associated with menstruation at work and in society as a whole.

We built the Essence App, which optimizes employee performance and well-being through AI hormonal cycle-based scheduling, to help fight against this stigma and normalize periods at work. Some practical ways to reach normalization include offering flexible, remote work options for employees and being open about our menstrual cycles, even with (and especially with) the men on our teams. ”

Does Working in FemTech Mean Fundraising in the USA Specifically?

Anya suggests that the concentration of FemTech companies in North America aligns with broader funding patterns, driven partly by significant healthcare challenges in the US. The country’s healthcare system, characterized by low affordability and quality, presents ample opportunities for addressing inefficiencies, making it a fertile ground for FemTech innovation.

“In my opinion, it resembles the distribution of funding in general. Also, in the US, healthcare is probably in the worst state from the consumer standpoint: affordability and quality of service is very low – which leads to more opportunities to target these inefficiencies.”

Gina attributes North America’s dominance in FemTech to its entrepreneurial culture and well-developed ecosystem of support for startups. She emphasizes the understanding and support for women’s health among female entrepreneurs, which facilitates easier financial backing for FemTech ventures.

“Because North America is more entrepreneurial than other developed countries – we have a more developed entrepreneurial ecosystem of support and like-minded professionals.”

Sylvia acknowledges the disparity in consumer awareness of women’s health between different regions, citing factors such as education levels and societal roles.

“Since I was born in China, I can confirm a tremendous gap in terms of consumer awareness of women’s health that exists in Asia compared to the Western world. Education level, women’s independence level, and the societal roles women play in Asian countries – all contribute to this gap.”

Marina adds, “I think the dominance of North America in FemTech correlates with the robustness of its startup ecosystem. The figures mirror the size of VC markets and the prevalence of unicorns in these regions, with 54.1% of global unicorns based in the US. Cultural factors also play a role; in some societies, these topics remain more taboo, suggesting a longer timeline for wider acceptance and growth.”

Is There a Knowledge Gap?

Anya Kern underscores the significant knowledge gap among women regarding their own health, advocating for comprehensive education initiatives spanning from academic institutions to social media.

“Education from academic institutions to social media should target that problem. And give your friends a book about women’s health. They would appreciate it at any age. For example, Vagina Obscura, by a science editor of Smithsonian Magazine, she writes for BBC Future, the New York Times, and Scientific American.”

Sylvia Kang acknowledges the substantial gap in females’ understanding of their health, citing research findings that highlight deficiencies in hormonal and sexual health knowledge.

“One of our surveys found that one-third of females know nothing about their hormones, and only 45% of respondents described their knowledge about their sexual health (including sex hormones) as “good”. We need to put a lot of resources into closing this gap, including research, funding, government policy, school education, women’s social standing, benefits policies, employers’ support, etc.

For example, this year starting on February 18th, Mira launches a nationwide Sex Hormones Awareness week to draw attention to the knowledge gaps in sexual health education. Besides online activities aiming to educate people about hormonal health, we’re hosting an onsite event in San Francisco. I believe this type of private initiatives could change the narrative around hormonal health and women’s health in general.”

Elina Valeeva points out the underresearched nature of women’s health, highlighting historical deficiencies in clinical trials and anatomical studies.

“Women’s health is vastly underresearched. Researchers fail to both include enough women in clinical trials and look for differences in treatment responses between men and women. Notably, the comprehensive anatomical study of the clitoris wasn’t conducted until 1998, and deeper observations using MRI technology weren’t made until 2005. This contributes to a substantial knowledge deficit among women about our own personal anatomy. It’s no understatement to call this an absurdity in modern society. We literally landed on the moon, and yet we’re still uncovering a basic understanding of half the population’s critical human anatomy.”

Final Thoughts

In conclusion, the FemTech sector stands as a beacon of innovation and progress in the realm of women’s health, yet it grapples with formidable challenges in securing the necessary funding to drive its transformative ideas forward. Despite exponential growth and the prevalence of female-founded ventures, FemTech startups face an uphill battle in accessing capital due to investor biases, market misconceptions, and the persistent stigma surrounding female-led initiatives. The perception of an oversaturated market, coupled with the belief that FemTech is a niche with limited growth potential, further compounds the funding dilemma.

Moreover, the lack of female investors capable of writing substantial checks exacerbates the funding gap, perpetuating gender disparities in venture capital allocation. However, amidst these challenges, signs of progress and promise abound, signaling a pivotal moment in the trajectory of FemTech. With growing recognition, support from governmental initiatives, and a renewed focus on women’s health research, the FemTech industry is poised to redefine the future of healthcare for women globally. By fostering open discussions, challenging outdated norms, and advocating for comprehensive education, FemTech pioneers aim to dismantle barriers, promote inclusivity, and revolutionize the landscape of women’s health entrepreneurship. As FemTech continues to evolve and thrive, it offers not only solutions to women’s unique health needs but also opportunities for societal transformation and empowerment.

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