Investors are clearly paying more attention to femtech and see the value in having dedicated companies for women’s health. Yet, not everyone feels the femtech label is an unalloyed good, financial data company PitchBook’s specialist in European venture capital deals, Leah Hodgson, writes in the company’s newsletter.
She argues venture capitalists need to embrace gender diversity and that we in the future should not need the term “femtech”. Only “tech” should be enough.
She reports that PitchBook’s data shows the amount venture capital invested in femtech startups—defined as startups focused on women’s health—has grown by 300% since 2016.
“With the recent slowdown, deals have dropped off, but activity seems stable. There are even a few femtech unicorns now, including Maven and Bellabet.”
Women make up half of the world’s population, yet femtech accounts for a tiny percentage of global VC healthcare deals, she writes.
“The market for femtech is expected to surpass USD 100 billion by 2030, and given that these are still the early days, the potential for returns is huge”, she writes, asking how many opportunities are being missed because of misconceptions of the definition ”femtech”.
“For a sector that attracted around USD 2.4 billion of venture capital money in 2021, “femtech” continues to be plagued by misconceptions.”
The femtech label was designed to help promote startups with the goal of improving female health and well-being. Coined in 2016 by Ida Tin, co-founder of menstrual health app Clue, it refers to companies focused on the heretofore underserved area of female health—ranging from fertility to menopause.
“Whatever the good intention may have been, the term has also created confusion”, Hodgson writes. “For example, it has been used to describe all technology catering to women. Even worse, some argue it has had an othering effect, in which femtech startups are not on equal footing with their peers in the broader healthtech and biotech industries—after all, the term “mentech” doesn’t exist. The consequence of this could be missed opportunities for founder and investor alike.”
“There is a deeper issue in VC that must be addressed for femtech startups to be on equal footing. VCs need to embrace gender diversity not just in the companies they choose to invest—female founders only accounted for 6.8% of deals in the US and 5.2% in Europe this year—but also in their own firms.”
“In Europe for example, only 15% of GPs (General Partners) are female, according to a report from European Women in VC. If investors boost women’s voices among their own ranks, that can unlock more capital and operational support for startups in the female health space.”
“Hopefully, femtech will eventually be regarded as simply tech. As it stands in 2022, femtech is not the label that women’s health-focused startups deserve; it’s the one they need—until the VC industry and society as a whole can recognize the equal value of women’s health.”