Last month, Ida Tin raised $20 million for her period-tracking app.
A few weeks earlier, the telemedicine startup Nurx brought in $5.3 million for prescribing birth control through an app, and the company Ava rounded up $9.7 million for a wearable fertility tracker. Add to that some notable raises from earlier this year $200 million in private equity funding for the fertility tech company Prelude and $14.7 million for its competitor Progyny.
It was a lot of money in a short amount of time for women’s health an area once seen by investors as “niche.”
“It’s interesting to see how the world has moved since we started talking to investors three or four years ago,” Tin, CEO of the period-tracking app Clue, told Mashable. “Back then, people would say it feels like a niche product, which it obviously isn’t since it’s relevant to half the world. We don’t hear that anymore.”
A $200 billion industry
Investors are finally catching on to the importance and market potential of tech startups that cater to the oft-ignored health needs of half the population.
Tin calls this category “femtech.” It includes period trackers, apps to prescribe birth control, internet-connected breast pumps and sex toys, apps and wearables for fertility tracking as well as tampon alternatives and wholesalers, to start. Tin estimates that $200 billion is being spent in these categories of women’s health already.
The companies gaining ground in this sector both in traditional healthcare and on the consumer side are backed by some of the most high-profile investors out there. Digital health startups as a whole raised $5.8 billion from investors in 2015 and $3.5 billion in the first two quarters of 2016, according to CB Insights. Full 2016 data isn’t yet available.
Nurx, the app for birth control, and Flex, a tampon alternative, both went through the Silicon Valley incubator Y Combinator. Tin’s Clue and Nurx are both backed by Union Square Ventures.
Flex and Nurx were both among the top 10 companies out of more than 100 to raise the most money during their respective Demo Days at Y Combinator, when the incubator’s startups present to potential investors.
“In the past year-and-a-half we’ve seen many companies applying that address these issues,” Y Combinator partner Kat Manalac told Mashable. “It is proof there is investor interest in this space.”
A delayed start
Although entrepreneurs working on women’s health say they’ve seen more interest from investors recently, they’re starting from a very low bar.
Women’s health startups raised just $82 million in the first three quarters of 2015, according to a report from the seed fund Rock Health. CB Insights found health teach in that year raised a total of $5.8 billion.
Compared to other areas of the tech world, women’s health tech is unexplored territory. Facebook and Twitter or Uber and Airbnb, for example, are all hovering around the 10-year mark.
“All the women’s health startups we see now, most of the ones we talk about in our space, have come up in the last couple of years. None of them are 10 years old. They were all founded in the last two-to-five years,” Ava co-founder Lea von Bidder told Mashable. “Tech has really taken over all of our lives, and at some point people started to realize some areas where it’s been lacking. Women’s health is one of those areas.”
One of the first of these companies to attract attention was the period subscription service HelloFlo, which went viral in 2013 with an ad depicting a girl who was the first one to get her period at summer camp.
At the same time as these companies were launching, feminism became a more popular rallying cry for marketers and major investors. During those years, health tech gained ground in categories other than women’s health from the first fitness trackers to companies trying to solve more complex issues in healthcare.
“The whole healthcare space has been seeing a lot more interest from investors,” Nurx CEO Hans Gangeskar told Mashable. “A lot of VCs are trying to make their bets in healthcare, in telehealth.”
The right investors
A few years on, companies working on these issues are gaining enough critical mass to spur more entrepreneurs and more investment. When investors see something that’s working whether it’s a food delivery service or a tampon subscription they want more of it. Even if the 89 percent male venture capitalists in Silicon Valley have been slow to catch on, as female founders and investors have testified.
“What you need as an investor and as an entrepreneur is a few role models in a space that make you feel like you can succeed in that space,” von Bidder said. “That’s what you’ve seen in the last couple of years.”
Jesse Draper is one investor who was ahead of the trend. Draper runs Halogen Ventures, which invests in consumer tech companies with female founders. Draper invested in the tampon-related companies Flex and L. as well as the smart breast pump manufacturer Naya.
“We’ve been excited to see amazing companies pop up in the women’s health arena,” Draper told Mashable. “It used to be we saw mainly fashion tech and beauty-oriented companies.”
Unlike some other investors, Draper seeks out the right company making a product she’s interested in. In one day this year, she heard pitches from five new tampon companies at the same coffee shop.
“In the last two-and-a-half years, we’ve seen a ton of these companies,” Draper said. “There definitely is a ripple effect.”
The future of femtech
In 2016, the cohort of femtech startups that cropped up in the past half-decade started getting more attention from mainstream investors.
Lauren Schulte, the founder of Flex, said that her investment from Y Combinator seemed to be representative of broader interest from the accelerator.
“They’re definitely expanding into consumer products and women’s health,” Schulte said. “We’re one of the flagship women’s health companies they’re invested in now.”
Still, only around 0.2 percent of applications to Y Combinator in its last three classes have come from companies working on women’s health in the healthcare space (which excludes consumer technology).
“There definitely need to be more female VCs and angels,” Manalac, from Y Combinator, said.
Then the birth control tech will follow.