Why we're betting big on women's health

Half the population is no niche.

With Lily Shaw, Leslie Schrock and Deena Shakir

Let’s start with a proclamation: Please stop referring to women’s health as “femtech.” 

Here’s what springs to mind to us when we hear that term:

But it’s also a framing that strikes us as inaccurate. As we will argue in this newsletter, we need to start embracing a much broader definition of women’s health – not as some niche market relegated to the personal care aisle at the grocery store or characterized by pink bows, but as human health. This month’s edition is a group effort. I invited my OMERS Ventures colleague Lily Shaw to share the European perspective, as well as seasoned women’s health investors Leslie Schrock (angel/author/advisor to Maven and Origin) and Deena Shakir (Partner at Lux Capital and investor/board member at Adyn Health and Alife Health).

Working in women’s health is personal for each of us, and not just because we are women. Deena is a mother of two, who experienced multiple pregnancy complications including gestational diabetes, labored for over 24 hours with each child and ended up with two emergency c-sections. She also struggled with over a dozen bouts of mastitis with each child. Leslie is a soon-to-be mom of two boys, and translated her experience with multiple miscarriages and a difficult birth into a book called BUMPIN’. Chrissy is writing this newsletter with her pandemic baby, and wrote about that experience here. All of us invest in digital health broadly in addition to a particular interest in women’s health.

The first thing we need to acknowledge is that women experience health care differently to men in a vast array of ways. We tend to live longer, but suffer higher rates of illness and disability throughout our lives. Today, 43 percent of women have high blood pressure, 1 in 10 is depressed, and two-thirds are overweight or obese. Unless women have the information, support, and confidence to manage their bodies – and start advocating for themselves in healthcare settings – these numbers, their associated co-morbidities and economic implications related to workforce participation will only continue to rise.

It is also important to note that women of color are particularly at risk for a range of health conditions, and their pain and conditions are often dismissed and ignored. For instance, by achieving health equity for Black women and girls, we could prevent up to 2400 additional deaths from breast cancer, contribute to 35 percent decrease in infant mortality rate, and add an additional $250B to the global economy.  

After years of most investors ignoring the space, women’s health has finally emerged as one of the most promising areas of investment. And yet, it still remains underfunded, particularly when you consider that more than 80 percent of healthcare buying decisions are made by women. We also comprise about 70 percent of all healthcare workers, spend more on our health, and are far more likely to use digital health tools than men. Just 3 percent of the businesses that have raised financing since 2011 are focused on women’s health, according to a Rock Health analysis. The majority of those fall under reproductive health. Considering women are fertile for only 30 out of their 80 years of life, we’re missing a half-century of investment opportunity by maintaining such a narrow focus. And more importantly, the ability to avoid some of these preventable diseases. 

The reasons for the paucity of investment are complicated, but we suspect that an important and obvious one is the lack of women making the venture capital investments. About 64 percent of venture firms don’t have even one female partner. We’ve heard time and time again from founders in women’s health that they’ll present their solution and hear back that the [typically male] investor will need to consult their wife or girlfriend or daughter to see if they’d use it. How many wives or girlfriends are going to be totally honest about their experiences with pelvic floor dysfunction or cervical mucus? 

Another factor that holds back this space: the stigma around issues related to women’s bodies. It starts during adolescence with an inability to communicate the basics of sexual education and lives on for decades. Girls grow up to believe that periods are gross, vaginas are smelly, and that the hormonal plight of half of the population should only be whispered about behind closed doors. Most women don’t know what perimenopause and menopause are until it happens to them or they seek treatment.  

There is also frankly a lot about women’s bodies we don’t know due to large scale, decades-long exclusion from research and systemic bias. From the time of the ancient Greeks, men’s bodies and cells, usually soldiers and criminals, were the ones dissected and studied. Thanks to the birth defect and stillbirth-causing drug Thalidomide, prescribed in the 1950s to treat morning sickness, the risks of research on women of childbearing potential were deemed unacceptable. In the name of protection, the United States, funder of 46% of the world’s medical research, excluded this age cohort from clinical trials between 1977 and 1993. Women are still underrepresented in clinical trials now, even though we know the sexes metabolize drugs differently, and women are more sensitive to them. This leads to a huge number of side effects and overdoses, as women consume 80% of all pharmaceuticals. Not only are women consistently under-represented in broader clinical research, but even in studies focused on women’s health, cohorts have been largely Euro-centric and rarely take into account social determinants of health. Further innovation in this space will contribute toward a future where precision and personalized medicine is the standard of care. We’re seeing some progress in this regard from companies like Adyn, which is helping women determine the best birth control for their bodies, and data-driven menstrual tracking solutions from Clue, WILD.AI and Natural Cycles. 

So where does that leave us now?

The state of the market today makes it challenging for companies to raise, particularly at the later stages. The journey from seed to series A is already a perilous one, with an estimated 17 percent of companies going onto raise their series A from seed. In women’s health, there is an added statistical hurdle when you factor in the gender investment gap faced by female founders. Research shows women raise less than half the capital of male founders on average, which doesn’t bode well for an industry where 80 percent of founders identify as women. There’s also a legitimate concern about the lack of exits in women’s health, though Modern Fertility’s recent acquisition by Ro (and CEO Zachariah Reitano’s proclamation that it’s just the beginning of their activity in the space) is encouraging. Still, we’d love to see more acquisitions the other way around. How about a woman’s health company buying a men’s health company? Outside of the biomedical world, there have been very few so far in digital health generally. A notable recent exception, of course, is the publicly-traded fertility company Progyny. But our overarching view is that women’s health is at a precipice and looking retrospectively at comps is too narrow an approach. 

Another issue we’re grappling with is how the market will consolidate. Will we see more women’s health companies merging to create broader platforms? Or will digital health companies like Teladoc/Livongo or direct-to-consumer companies like Ro continue to make strategic acquisitions in this space to broaden their own offerings? We think it’ll be a combination of the two – and in the U.S. market, it very much depends on the payer whether they’d prefer a vendor solely focused on women’s health, or one that’s part of a broader health solution. 

We believe that the space is large and infinitely investible. Overall, we’re projecting a $50 billion women’s health market by 2025, in line with a recent Frost & Sullivan report. What we want to drive home in this newsletter is that women’s health goes far deeper than reproductive health and pregnancy (getting pregnant or avoiding it) or period tracking – although there are significant opportunities for innovation and value-creation there. And even though we have a long way to go improving patient experience and access in the healthcare system, we must also invest in more fundamental problems, namely the root causes of disease and preventive healthcare. 

So where are the gaps?

We’ve laid out why women’s health is underserved and remains a huge opportunity. So where do we see opportunities? As always, we believe that the team is everything. But there are some parts of the market that we see as more wide open than others. 

• More than fertility or periods: In line with Rock Health’s recent report on the topic, we believe that women’s health in general needs to be viewed in a far broader lens than reproductive health. Health investor Lisa Suennen reinforced this point in an email to us: “The companies seem all to be focused on gynecologic or maternity conditions, more or less. Most women I know have other body parts. Why are we not seeing more companies focused on women and heart disease (which kills more women than anything else) or women and diabetes or women and neurologic conditions?”

• Thinking bigger in fertility: Fertility has been a major focus for venture-backed women’s health companies, including Progyny, KindBody and Overture. It’s our view that we need to see a breakthrough, likely by bringing down the cost of treatment, or passing regulation that mandates insurers and Medicaid cover services. Another important shift would be to allow obstetricians and nurses to take on more aspects of treatment with guidance from a reproductive endocrinologist. We’d also like to see more companies focus on men’s bodies, like Legacy, as they account for half of all fertility issues. 1 in 8 couples struggle to conceive naturally and the cost of treatment is often out of reach. IVF can cost upwards of $12,000 a cycle in the United States. It’s one of the few health technologies that has seen utilization/outcomes decline in the past 20 years. Cost, adjusted for inflation, has only slightly declined in that same period.

• More focus on Medicaid: We see a major opportunity to serve more diverse populations of women, with a particular focus on Medicaid. Most U.S. companies thus far have focused on commercial payers, where they’ve had more success selling their solutions. But women are more likely than men to be uninsured, and qualify for Medicaid more frequently because they are more likely to be supporting children and aren’t paid equally to their male counterparts. Given the rates of women leaving the workforce during the pandemic, that disparity is only set to increase. BIPOC women have lower access to care and experience worse health care outcomes. This is unacceptable. Rates of maternal mortality in the U.S. are the highest in the world compared to other developed countries, and women of color are four times more likely to die of what are largely preventable causes. Fortunately, companies like Quilted Health, Twentyeight Health, Cityblock Health are focused on this population and we suspect that we’ll see more gain traction in the coming years.

• Building out community and social: Peer support is nothing new. Mom groups, for instance, have been around forever and have proliferated on Facebook and Reddit. What we’re seeing today is a new emerging category of companies that combine peer/community support and clinical expertise. Women starting families should have access to doulas, lactation consultants, therapists, pelvic floor therapists, pediatricians, and midwives, as well as a network of fellow parents. Curation is vitally important to ensure that the content is high quality and validated by medical experts, as there’s plenty of misinformation out there when it comes to parenting. As Dr. Stephanie Kuku, a surgical oncologist and health-tech advisor notes, it’s vitally important that OB-GYNs are also brought into the mix, both in making referrals and feeling confident that women are receiving accurate information from their peers. A common misconception, she told us, is that “direct to consumer fem-tech can fill some of these gaps in care without the engagement and buy-in from the OBGYN community.” Curating the members within each cohort is critical too, as engaging and empathizing with others in the trenches is another way these services become and stay sticky. 

• Serving more diverse populations: LGBTQ+ populations, for instance, have very specific healthcare needs, from access to providers trained in their care to assisted reproduction services to transgender hormone therapy. Decades of discrimination has resulted in higher rates of substance use disorder, behavioral health conditions and suicide in these communities – and any reproductive health company needs to acknowledge and solve for that. 

• Taking a ‘platform’ approach: A lot of companies are approaching the market with features or point solutions versus platforms. Doing one thing well could wedge into other conditions, and in early-stage startups a clear focus and strategy is important. But not having a clear vision for horizontal growth is too limiting, and we see many founders struggle to raise funding for this reason. Ultimately, we’d like to see more startups take it all on with a more holistic, platform-based vision. We’d love to combine that stellar app for postpartum depression with that app for postpartum pelvic floor dysfunction, so it’s all available to users in one place. This will provide better coordination and solutions to patients, and more opportunities for large enterprise customers who are exhausted and overwhelmed with the proliferation in digital health companies.

• Placing bigger bets on menopause: Women in the menopause age cohort have over $15 trillion in buying power, and there are few companies serving them. Part of this may be because perimenopausal and menopausal women themselves are surprised by symptoms when they happen, as it’s yet another stigmatized, little discussed transition in women’s lives. Combined, the pauses go on for a full decade, yet 80 percent of women’s health providers cite their menopause-specific training to be nearly nonexistent. This leaves room for companies focused on a combination of education, support, and care. Despite the math speaking for itself, companies working in this space are struggling to raise capital, we suspect for the same reasons listed above – a mix of male investors who haven’t experienced hot flashes personally and myopic views on market potential. 

(Source: A report from Laurie Zephyrin, Lisa Suennen, Pavitra Viswanathan, Jared Augenstein, and Deborah Bachrach)

And a quick note on innovation in Europe: We’ve found at OMERS that a nationalized health care system, for all it’s wonders, does result in some challenges for founders. There are numerous founders who have cited difficulties from the different regulatory regimes across the continent, and how procurement processes tend to favour larger companies in comparison to start-ups. But it is also clear, and a quick look at our U.S., centric market map (below) confirms this, that there is a much smaller community focused on solving women's health issues. One promising company we met with recently is Clue, which is headquartered in Berlin and recently got FDA clearance for its digital-only birth control. There are promising signs in recent years that this is changing, with a growing number of angels supporting the ecosystem alongside promising new accelerators. For instance, the success of the initial femtech cohort at Station F has enabled a second cohort for later this year, alongside the launch of FemTech Lab in London, whose first cohort will be demoing later this month. 

Ideas we’d like to fund

We’re innovating over here at Second Opinion with a brand new section. Each edition, an investor or two will share an investable idea. This week, we started with Alyssa Jaffee from 7wire, who’s been spending a lot of time exploring this space:

The idea: A technology-enabled doula for underserved populations

“Despite advances in medicine, maternity care has been characterized by rising costs and declining outcomes in the U.S.; maternal morbidity rose 26% from 2000 to 2014. Racial disparities remain prevalent, particularly across vulnerable or low-income populations. Additionally, modern hospital maternity care practices have reduced the availability of an attending nurse to remain with a mother during labor. Doulas are trained to provide physical, emotional, and informational support to women during labor, birth, and in the immediate postpartum period. While studies have shown doulas result in positive maternal outcomes, particularly in low-income populations, such services are primarily uncovered and primarily cash payment, leaving low-income and higher-risk individuals without support. Why not leverage technology to emulate the experience of receiving bedside support to deliver physical, emotional, and informational support to these vulnerable populations and under-served markets during labor? The COVID-19 pandemic has incited the use of telemedicine across multiple birthing centers. Given the demonstrated efficacy of virtually-delivered bedside support, a tech-enabled service, paired with a digitized educational and emotional support platform could be leveraged to enable vulnerable hard to reach patients to access doulas and supportive care during birth.”

And also put a man on the spot: Michael Yang from OMERS Ventures 

The idea: Support for the sandwich moms

“I’ve become very aware recently of how many women in my life are supporting their aging parents, while simultaneously raising kids. Women live about five years longer than men, so it’s often their mothers. The majority of caregivers (about 65%) are also women, according to AARP. I’d love to see a startup that supports them. I’ve had so many conversations about this with female friends about this in the past few years. They know I’m in health care so they’ll often ask me for advice - and I often wish there was a service designed specifically for them. The right idea would encompass health care navigation tools, community support, financial advice and more. We need more whole-person health, and we need to incorporate the contextual issues that she is facing. Many of the women’s health start-ups that we’ve come across are tied to reproductive health and appropriately so. But given the role that women play in our society as chief caregiver, more and more women are being sandwiched and that is taking a toll on all parties involved.”

COOL JOBS ALERT!

• Love connecting to users? While we’ve dedicated this post to women’s health, we see a lot of promise for men’s health companies too. Peak is hiring a VP of Community. The company tells us that the ideal candidate is passionate about healthy living, optimization, and likes building things that are highly disruptive. Apply here.

• Got a passion for community? Oath, a social network for moms and moms-to-be, is on the hunt for a founding CTO. If you’ve got engineering chops and you’re passionate about women’s health/pediatrics, reach out and apply here.

• Want to help kids? GoCheck is looking for a head of product to support its mission to end visual impairment globally. Thousands of pediatricians already use it to identify potential risk factors. The ideal candidate has at least four years of experience working in health care. 

• Want to support patients with cancer? Jasper needs a CTO to help build its direct-to-consumer offering, which will always be free to cancer patients and their caregivers. If this sounds like a role for you, apply here.  

• Passionate about research? The folks at Evidation are looking for a consumer researcher to deliver meaningful insights in the fields of digital health and pharma. We love this company’s mission to go fast, while maintaining a commitment to quality and integrity. Apply here.

• Interested in a role in VC? Cleveland Clinic’s venture arm is looking for a partner focused on health technology. The ideal candidate, we’re told, is entrepreneurial and has some experience raising funds and/or sitting on boards. But there’s a lot of interest in hiring someone from a more diverse background. Check it out here. 

• Want to work with Jonathan Bush? Seasoned health-tech executive Jonathan Bush is off to the races with a new business called Zeus Health. It’s looking to build health-oriented, API-first services and is looking for an experienced designer and researcher to jump in. 

• Interested in the marketing side of VC? 7wire Ventures is looking for a Director of Communications to join the team who’s got a passion for digital health and a network of media relationships. 

• And become one of our own… OMERS Ventures is looking for an investment associate to focus on enterprise software/the future of work in the Bay Area office. As a fund, we’re open to a diverse range of backgrounds. If this sounds like the dream job for you or someone you know, apply here.