Just a few years ago, investment in women’s health was sparse. Global funding for the femtech sector had barely reached $100 million and there continued to be a glaring lack of research into critical areas such as female heart disease and gynecological disorders. That is finally changing, driven in large part by female funders who have identified the value in the sector and have started putting their money to work.

The Femtech Market Is Exploding

Historically, the female market was considered a niche market. Despite the fact that women make up half the population and manage the majority of household income, few companies marketed products directly to women. Some have explained this market inefficiency as the result of male investors struggling to understanding the value proposition.

But that hole in the market is now rapidly being filled. “Femtech,” a term coined in 2016 by Ida Tin, the founder of period- and fertility-tracking app Clue, refers to technologies and products that are designed for women’s health. This includes businesses focused on period care, pregnancy, childbirth, aging, menopause, fertility management and sexual health. According to Frost & Sullivan, femtech investments in 2018 totaled more than $400 million and are expected to increase to $50 billion by 2025.

This estimation is driven part by the broad range of products that are just now coming to market. For example, Maven, a digital health platform for women, raised $2 million in September 2018 to expand into breast-milk delivery. Other women’s health startups that have recently been funded include fertility solutions (Prelude Fertility, Rinovum, Celmatix, Progyny, Univfy, Conceivable, Nora), period and fertility tracking mobile apps (Flo, Clue, Glow, Natural Cycles, Maya, Ovia), period care goods (Lola, Lunapads, Thinx, Flex, Kasha, Cora, PMS Bites), products to support women’s sexual wellness (Nuelle, Sustain), and pregnancy and nursing care offerings (Bloomlife, Naya, Moxxily, Lucina, and Lia).

And Women Are Funding It

Much of the investment in femtech has been driven by another expanding market: female fund managers. Some funds are dedicated exclusively to funding women's health enterprises. Astarte Ventures invests in companies centered on the health and wellbeing of women and children. Portfolia, a venture platform financed almost exclusively by female investors, announced a new fund in 2018 that would focus exclusively on femtech.

Some women who have launched more traditional funds, where investing in startups may be outside their investment directive, are also finding ways to leverage diverse investment strategies. Private equity fund Turning Rock Partners and hedge fund Impactive Capital are reviewing investments through the lens of ESG (Environmental, Social and Governance investing), which champions diverse governing teams and strategies. Female funders are also expanding beyond the traditional fund structure. The First Women’s Bank of Chicago will be launched in large part to support women through traditional loans. We should not, however, understate the work that is still ahead. Last year women-owned private equity and hedge funds managed less than 4% of industry AUM, and less than 3% of venture capital investments went to female founders. Let’s hope these numbers have changed when we update this alert in 2020.

Continued investment in women-focused products by venture capital and traditional investors optimistically will lead not only to innovation in women’s health, but also to improvements in female representation on investor boards and C-suites, and may help close the gap in science and technology positions for female clinical researchers and computer engineers. Significantly, this kind of investment can also increase access to care and job opportunities for women in rural areas and developing countries—truly making women investing in women a cause for celebration.

If you have any questions about the material presented, please contact Jessie M. Gabriel (jgabriel@bakerlaw.com), Adam Gale (agale@bakerlaw.com) or Tara Ravi (travi@bakerlaw.com), or any member of BakerHostetler's Investment Funds Team.

Authorship Credit: Jessie M. Gabriel and Tara Ravi