The Rise and Rise of Femtech
Products that can dramatically help us navigate female reproductive health, fertility, and menopause globally
Released May of 2021, Master of None: Season 3 by Aziz Ansari artfully captures the emotional fortitude required by gay and lesbian couples looking to start a family. When it’s time, lesbian couples navigate the world of in vitro fertilization, soliciting the help of a male friend. However, these women are only able to catch fertility issues fairly late. There’s a lag here in problem detection that straight couples avert-- but no doubt, IVF is a harrowing process for everyone. In Ansari’s show, mid-season, one of the main characters, Alicia, is strongly motivated to have a child on her own. She undergoes severe physiological changes, failed IVF attempts, and financial trouble at work as she literally puts all her eggs in one basket.
This is not just a fictional artpiece. Young and middle aged women around the world facing fertility issues must navigate the challenges of IVF. Egg collection for example has been variously described as an uncomfortable, high stakes emotional rollercoaster. As one patient puts it:
“Without a doubt, the worst experience of my life...just so awful...so traumatizing.”
- Sarah
There were over 250k IVF procedures in 2019 in the U.S, and data was just released this year around the success rate. Check out the chart below - less than half of these IVF procedures administered in the United States actually worked, and that rate just drops with age. Physicians are motivated to collect large batches of eggs, to maximize chances of success.
However, one of the most interesting implications of this behavior is that the U.S. sees a disproportionate number of abandoned embryos. Embryologists receive orders to inseminate 50-60 eggs per patient, these huge batch sizes being a vestige of the 1990s -- even though freezing techniques have improved. At a typical fertility clinic, like Dr. Craig Sweet’s in Florida, a full third of embryos can go abandoned. The cost to the patient of storing these embryos is $600 per year, so it makes sense why a successfully inseminated patient would discard these.
This is different from the norm in other countries like Italy and Germany where only a few eggs can be transferred at a time. Clinics - who hold the power in this marketplace - would not want to waste resources and freezer space on these abandoned eggs. And just as European healthcare systems influenced ACA legislation less than a decade ago, I can see less wasteful European approaches to embryo collection inspiring US fertility clinics. One fix is sending embryos to organizations like Embryo Donation International (EDI), which collects these discarded embryos for infertile couples to conceive. Their only requirement is that patients sign release paperwork before this process takes place.
Companies like Docusign are well poised to bolster outreach to IVF clinics on behalf of organizations like EDI, and provide patients a quicker method of filling out paperwork. I hope to revisit this topic of more quickly filling out forms as a way to improve efficiency in the legaltech and real estate (signing a leasing agreement) sectors in future weeks. However, this is an important theme wherein Docusign and tech companies like it are paving the way for more efficiency in the femtech space. Indeed, the company’s revenue grew 50% yoy in 2020, a harbinger of future growth and an unsurprising result when its historical sales growth is considered:
U.S. clinics that wish to reduce egg abandonment could likely pursue a more rationed approach to the first cycle of egg collection. In this scenario, smaller batch sizes would result in no good eggs for insemination more often, but this will then prompt more and more cycles. Right now, women already undergo 3-6 cycles. Overall, the number of IVF cycles women undergo should increase as clinics combat the issue of egg abandonment. The obvious counterargument: wouldn’t 5-8 cycles, say, offset fewer eggs per batch- thereby increasing wasted eggs? I believe past a certain point, couples won’t often pursue 10 cycles; they’ll just give up earlier. Though this is unfortunate, the number of total cycles will not increase astronomically.
What startups benefit from this trend? Perhaps most obviously, the problems that plague the IVF process will be exacerbated. Right now, one in eight couples struggle to conceive. There will be triple the need for a strong support community and a healthcare network supporting these women as cycles fail. We find exactly this type of solution in Robyn, a platform for women facing fertility woes, pregnant women, and new parents. These women are connected with one another as well as doulas. This platform inspires fem-education and trumps stigma.
Though my thesis is that cycles will increase, there will still be added effort and pressure to improve healthy egg collection. High-tech startup Mojo leverages AI to improve the detection of healthy sperm and eggs through IVF from 25% to 75% in high end labs. For a procedure that costs couples $10-20k per cycle, using computer vision can improve success rates tremendously. Alife Health, backed by Lux Capital, is another startup in this space selling to clinics - clinics using Alife don’t need a special microscope and or clunky interfaces. By making customer adoption smooth, Alife is the better bet.
Looking above at this helpful infographic from Forbes, you’ll note that as of mid-2020, most of the fertility tech funding was early stage. These companies will incubate and be ready for Series B and C infusions in a couple years. To prepare for that partnership, growth equity firms should start forging relationships now.
Fertility tech fits within a wider swath of femtech startups targeting reproductive health in general. Coined by Ida Tin, ‘femtech’ refers to any tech-enabled product or service improving women’s health. This space sub-divides into three buckets:
(i) Tracking reproductive health, periods, and sexual wellness: There are period tracking apps and wearables (like Maya and Kegg, respectively), and startups that collect and analyze bio-based samples (like Evvy, which assesses the vaginal microbiome for yeast infections). While the former seems like it has less room for value additive information (I am bearish on useless data inundation), sample startups could add actionable data for women.
(ii) Fertility tech: As mentioned above, there are community focused apps like Robyn, as well as fertility testing companies. The biggest one in this space is Modern Fertility, a fertility testing kit provider and investment success story. The company launched in 2017. Three years later, Forerunner Ventures’ Kirsten Green invested $15m in the company. Assuming a 10-20% stake (typical for VC), the valuation was $75-150m. Just a year later, Ro acquired the company for $225m, a 2-3x MOIC in less than a year. For context, private equity firms shoot for this multiple in five years.
(iii) Menopause tech: After periods and fertility, women finally reach menopause. This comes with regular hot flashes and vaginal pain during intercourse - as if pregnancy is not hard enough. This is a formidable part of life that just comes with aging - by 2025, 1.1Bn women across the world will experience menopause, and they will be a more tech-savvy generation than a decade past. However, you’ll note below that funding for menopause startups has not kept pace with femtech overall.
Honestly, the startup offering in this space is not impressive. Some like Elektra Health in NY slap the ‘telehealth’ bandaid on these problems and call it a day- ‘we’ll help you book virtual appointments with an OBGYN and supply the video interface.’ This does not solve the key problem though. Instead a novel upstart might directly address menopause pain points, through a kit of lube/a lubricated toy (to ease intercourse) and a temperature-sensitive wearable that emanates a spray of cool air/water during hot flashes. It’s not a panacea, but it’s an idea. Startups already in the sex toy space like Zazazu and Good Vibes are best poised to capitalize on this opportunity.
One of the most interesting questions is how these trends in femtech evolve in developing markets. To better understand this, we’ll do a dive into a couple young upstarts in the Indian femtech market, before painting broader generalizations about global markets.
The Indian Femtech Ecosystem
If U.S. femtech has been growing rapidly over the past five years, Indian femtech is just at the cusp of breaking out. Indian femtech includes Celes Care and Oowomaniya - which connect women with physicians, psychologists, gynecologists, and fitness trainers so that they can open up. These experts on the platform need an incentive to take on extra patients. I’m not convinced the additional income is motivator enough - surely there must be a “budget” approach to treat patients in a nation that’s a billion-strong. It may not make sense to overly rely on connecting all with a medical professional, especially in lower middle income areas.
Enter Pinky Promise. Pinky Promise is one of the more interesting upstarts in the arena- a startup that is ripe for a $5m Series A infusion. Pinky Promise is a mobile app that released in June 2021 and attracted nearly 1,500 female users in 2mo. The app allows users to chat with one another about issues surrounding their menstrual cycles, sexual wellness, and reproductive health anonymously. This anonymity allows users to bypass the stigma of sharing intimate details and help one another girl to girl - no experts needed. Questions about specific medical issues? Their chatbot is coded with dozens of prescriptive flowcharts from Mayo Clinic, the UK’s NHS, and other reputed providers. Similar to WebMD, it guides the user through questions, ultimately presenting helpful treatment information- not a diagnosis but helpful for next steps. The founder Divya Kamerkar walked me through this chat briefly and I could see for myself the openness and genuine support these users were providing one another.
To evaluate an early stage startup idea, I believe in pressure-testing the need for and willingness to engage with this idea. Do Indians have easy access to medical professionals? Would they be comfortable soliciting medical feedback from an online source at all? We can’t make assumptions about the culture. Of the 75% of female respondents that faced a reproductive health crisis in a Pinky Promise survey, only 30% went to a clinic - the rest just Googled their problem. Plus, clinic appointments are only 2min anyway, so there is minimal added value from the in-person visit. Of course, India needs more OBGYNs and healthcare workers to manage the need, but apps like Pinky Promise provide the budget solution in a developing market.
Pinky Promise is focused on building its network of users but the app also features a nascent marketplace of femcare products. This has potential down the road: a bustling community that already trusts the app for medical advice is prone to buying products here. It’s still early innings for this marketplace though; they sold 25 of their own products in their second month. They would do well to partner with other femcare startups in the country to broaden their marketplace offering.
One such viable partner is FLOH, founded by Gauri Singhal, a fellow peer completing her Wharton MBA. FLOH is selling menstrual care products (pads, tampons, cups) to India’s middle class. The penetration of these products is 18%, so there’s a lot of whitespace in this market for India. And while ‘stigma’ is thrown around a lot, and applies to having a femtech app on your phone, there is no stigma around owning menstrual care products in India, as Gauri tells me. This is a key insight from many on-the-ground conversations she’s had in schools, clinics, and women’s groups. The limiting reagents here are price and availability; many lower income folks end up using DIY or low-cost solutions. There is opportunity for a capital infusion in a low-cost menstrual care products plant for India’s bottom third socioeconomically. We don’t need state of the art products for them - we need something sensible.
Here’s a hot take about developing healthcare markets more broadly: we need to rethink Western norms and systems from the perspective of what is actually possible given resource constraints and population needs -- rather than tracking to the Utopia listed out in humanitarian treatises like the U.N. Right to Health. It’s a take the Amal Clooney’s of the world may bristle at. These documents provide solid long term goals - but we need to be scrappier. If that means care without experts in the short run, so be it.
Yet for all this opportunity, investment dollars are stiff. Only 3% of digital health deals are femtech investments. Given the double digit growth rate of this sector, venture capital is missing out on community- and network-focused femtech investment opportunities.
What now? What in this piece is actionable? For one, 90% of the VC boards in the U.S. and U.K. are males - who do not understand women’s issues as well as women themselves. From a hiring perspective, VCs who are somewhat interested in this burgeoning space should actively prioritize hiring women. Secondly, funds of funds and LPs putting their money in venture capital should look to the following six femtech investors and urge them to read this piece and invest accordingly:
BGF - UK growth equity firm that invested £58m in breast pump startup Elvie
BBG Ventures - a $50m NY-based fund focused on female-led startups
Portfolia Femtech I and II - Exclusively femtech focused, first fund in 2018
General Catalyst - backed Evvy, aimed at assessing the vaginal microbiome
Forerunner Ventures - women focused VC, gained clout from Modern Fertility
NEA - >$20Bn AUM invested in Cleo, which capitalizes on the entire womb-to-child continuum of care
Special thanks to Kate Wheeldon, Gauri Singhal, and Divya Kamerkar for their insights and contributions as founders and enthusiasts in the femtech space