For a sector that attracted an estimated $2.4 billion in venture capital in 2021, “femtech” continues to be plagued by misconceptions.
A recent conversation with a founder whose startup is developing treatments for women’s health issues illustrated this problem. The founder shared her experience of being told quite bluntly by a biotech VC when initially approached that they “didn’t really invest in femtech” – the implication being that the feminine aspect was a factor. disqualifying.
It’s a perhaps familiar experience for some health tech founders looking for solutions targeting women. The femtech label was designed to help promote startups with the goal of improving women’s health and well-being. Coined in 2016 by Ida Tin, co-founder of menstrual health app Clue, it refers to companies focused on the hitherto underserved field of women’s health, ranging from fertility to menopause.
Whatever the good intention may have been, the term has also caused confusion. For example, it has been used to describe all technologies aimed at women. Worse still, some claim it has had an otherness effect, in which femtech startups are not on equal footing with their peers in the broader health tech and biotech industries – after all, the term “mentech” does not exist. The consequence of this could be missed opportunities for the founder and the investor.
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When Tin introduced “femtech,” there had been little public discussion about women’s health in the tech world, especially among male investors. In this regard, femtech has served as a convenient euphemism for discussing products, such as menstrual cups and smart breast pumps, that some people may feel gross about.
Indeed, PitchBook’s own data shows that the amount of venture capital invested in femtech startups — defined as startups focused on women’s health — has increased 300% since 2016. With the recent downturn, deals have plummeted. , but the activity seems stable. There are even a few femtech unicorns now, including Maven and Bellabeat.
Investors are clearly paying more attention to femtech and seeing the value in having companies dedicated to women’s health. Yet not everyone thinks the femtech label is an unmitigated good.
In addition to “otherness”, another concern is that the ranking of femtech startups also obscures the variety existing in the sector and the unique value proposition that each startup holds. A company offering menstruation tracking, for example, will have very different capital and operational needs than one developing a treatment for endometriosis.
The femtech tag covers a wide sector and hence an expansive opportunity. After all, women make up half of the world’s population, but femtech only represents a tiny percentage of global VC healthcare transactions. The femtech market is expected to surpass $100 billion by 2030, and given that it’s still early days, the potential for returns is huge. How many opportunities are missed because of this label?
Yet, despite all the flaws, we haven’t gotten past the point where it’s needed.
Another founder I spoke with pointed out that the process by which women’s health is given equal importance by investors is gradual. “Femtech” not only provides much-needed visibility and representation in a male-dominated world of technology, but it’s also a way to measure progress.
There is a deeper problem in VC that needs to be addressed for femtech startups to be on a level playing field. VCs need to embrace gender diversity not just in the companies they choose to invest in (female founders accounted for just 6.8% of deals in the US and 5.2% in Europe this year) , but also in their own companies.
In Europe, for example, only 15% of general practitioners are women, according to a report by European Women in VC. If investors strengthen the voice of women in their own ranks, it can unlock more capital and operational support for women’s health startups.
Hopefully, femtech will end up being seen as just technology. As things stand in 2022, femtech is not the label that startups focused on women’s health deserve; it’s the one they need, until the venture capital industry and society as a whole can recognize the equal value of women’s health.
Featured image by Jenna O’Malley/PitchBook News