Femtech in France
What is Femtech?
Coined in 2016 by Clue founder, Ida Tin, femtech refers to software and tech-enabled products or services that cater to women's health. Over the past few years, the sector has seen increasing growth with awareness of women's health issues on the rise and the emergence of new (for the business world... not for women) subcategories. It is therefore no surprise that companies like Willow, Maven Clinic, Prelude Fertility, Kindbody and Elvie are raising massive rounds.
Femtech has historically been segmented into four main categories: reproductive health (including menstrual & fertility solutions), pregnancy & nursing care, pelvic & uterine healthcare, general healthcare and wellness. But we believe the industry today can be better understood by breaking it down into the following categories:
- General healthcare
- Wellness & sexual life
A widely underserved global market
Despite the fact that 90% of women are the primary healthcare decision makers for their family and the estimated $500bn in annual medical expenses attributed to women (29% more per capita compared to men), only 4% of all healthcare R&D is targeted specifically at women’s health issues.
This gap is quite astonishing in the context of startup funding worldwide. Even though femtech investment has increased dramatically over the last five years (+27% CAGR from 2015 to 2020, with a faster increase on series C+ stages as the industry has matured over the years) to reach €1.2bn worldwide, it only accounted for 0.4% of total funding amounts in 2020. This figure has obviously improved since 2015, when it was as low as 0.2%, as the number of Femtech startups has risen. But it stabilized in 2019 and 2020.
The UK, Germany and France leading the way in Europe
When taking a closer look at Europe, the funds raised by Femtech startups in 2020 amounted to €60.2m, accounting for 0.6% of the Healthtech deals in value in 2020 (vs. 1.7% worldwide). To be fair, it is worth noting that European Femtech investments accounted for 2.3% of Healthtech deals in 2019 - hence the ratio probably decreased partly because of the increase in the total amount raised by Healthtech startups and the decrease of the overall investment pace in Europe last year. In France, Seed and Series B rounds were particularly hit hard by the decrease in the investment pace.
According to Dealroom, three countries are at the forefront of the Femtech surge in Europe: the UK, where companies like Elvie, Kheiron Medical Technologies, Live Better With and Daye are located; Germany with Clue; and France that houses Apricity, AblaCare and Endodiag.
Current state in France
In the past few months, we've interviewed 50+ actors in Femtech to understand the day to day reality of Femtech entrepreneurs. Beyond the market opportunity, Femtechs startups meet common challenges specific to this industry. Here are the 5 main challenges they meet in the field.
Need for more community
The Femtech ecosystem is still young in Europe compared to North America and, for now, connections between all Femtech actors are still lacking. That's the case among entrepreneurs but also between the tech actors (entrepreneurs and investors) and the medical world. Stronger connections that will strengthen and accelerate the ecosystem are still being built.
That's the aim of SISTA Femtech: To connect Femtech actors in Europe to enable more collaboration in that space. You can join the community here and be notified of upcoming community events.
Need to break-through taboos
Most Femtech segments suffer from a taboo around the topics they tackle. When you consider that menstruations are still shown as blue in most mainstream communications; social networks block publications when linked to female sexual wellness; discussions around menopause topics are held back in the media because they're not seen as sexy enough; or that you can't get public funding if your startup is linked to sexuality, then you begin to understand how many extra challenges a Femtech entrepreneur faces above and beyond the more common difficulties of every entrepreneur.
Lack of credibility when raising money
Raising as a Femtech startup can be more challenging than in other industries. Different reasons are underlined by entrepreneurs for this:
- Most Femtech entrepreneurs are female. Female founders already face a disadvantage across all of tech. Specifically, women receive less money and less often than men. According to a SISTA & BCG's study, female founded startups have a 30% less chance of raising money.
- Female and male founders get asked different questions by VCs. A Harvard study showed that VCs tend to ask more promotion questions to male founders and prevention questions to female founders. This highlights the ongoing systemic problem of unconscious bias.
- Most fund partners are still overwhelmingly male. By definition they don't experience the pain Femtech products are designed to solve. This blindspot makes it very hard for them to see the business opportunity.
- There is no real market data or relevant business comparisons when VCs calculate their SOM. For instance, when you're the first female sexploration app on the market, VCs could compare your metrics to what they consider to be a comparable product, such as a meditation app, even if usage is really different. Having no real comparisons for a new type of product means it’s hard for VCs to figure out how to fit that product into their investment decision making process.
Lack of communication
Many Femtech entrepreneurs we talked to observed that there is a lack of visibility and communication around Femtech topics. It's still not rare to have someone view Femtech as a niche market despite the fact that it targets 50% of the population. This is because it’s simply out of the realm of their experience.
- There is a lack of communication about Femtech products. Many are still invisible because they either address a taboo issue or because the subject they are addressing is not sexy enough to get the attention it deserves.
- There is a lack of communication between Femtech actors. They usually disappear into the enormous “health” industry. This means it’s still difficult to target and connect with the right people in the industry.
Need to stand on social debates
Topics related to women’s health are necessarily linked to the evolution of society and new social debates surrounding gender. Femtech entrepreneurs, you have no choice but take a stand in these debates. The way women choose to talk about gender, sex, and identity overall will have an impact on their brand and their targets, which is not so common in other industries.
The evolutions we foresee in the space in France
The industry gained awareness through startups addressing rather straightforward women's health topics like menstruation or fertility. However, we are convinced that an increasing number of players in the space will target even more specialized groups:
- Either by bundling their services and going even further upstream in women's lifecycles that have been overlooked until now, like menopause. Menopausal women are expected to account for 1.1bn people by 2030, with 47m women passing through this stage each year. Additionally, menopausal women have, on average, higher purchasing power than younger women and are an increasingly digitized population.
- Or by focusing on specific medical pathologies like endometriosis, hormonal imbalances, premenstrual syndromes or conditions that are seen more often in women than in men like autoimmune disorders or mental illness.
Hardware and medical devices that didn't always include data tracking were prominent when Femtech startups started emerging. A few startups focusing on developing sex toys and pelvic floor devices, for instance. However, the space has definitely understood that data is key, especially now that it's common knowledge that women are underrepresented in medical research. Femtech startups will increasingly integrate data into their core value proposition, enabling women to understand their bodies while using data to improve research in women's health.
In terms of teams, Femtech companies have historically been launched by women as they are more likely to understand the pain their companies tackle. However, we are convinced that we will see more and more men in the founding teams of these Femtech startups as:
- Some exits in the space have happened over the years. KaNDy Therapeutics (UK) acquired by Bayer in August 2020, Lucina Health (USA) in January 2020, Progyny (USA) listed on NASDAQ October 2019, just to name a few. These exits show potential future founders, both men and women, that it is possible to make money in the women's health industry.
- Women's health topics are becoming less and less taboo in France (even if we still have quite a lot of room for improvement!), which enables women to discuss these issues more freely with their partners and friends - both men and women. This raises awareness of these issues. A few French Femtech startups are male-led, such as Perifit, WeMoms, Lattice Medical and Nateo Healthcare. Others have mixed founding teams, such as Endodiag, Fizimed, Apricity, May and Sonio.
Most Femtech startups started with a B2C model as it is the most straightforward way for them to disrupt and influence the industry. However, big opportunities lie in collaborations with existing healthcare incumbents. Another interesting route that startups like Progyny (USA) or Peppy Health (UK) have taken is the employee benefits. In France, Alan, the Digital Health insurer, seems to be paving the way. They launched an app dedicated to parents that will supposedly be followed by apps dedicated to women and chronic disease patients.
Obviously, these changes won't happen overnight in France and will most probably occurr simultaneously with a change of mindset in the investment industry regarding the potential of Femtech, both from an economic and societal point of view. This will enable these startups to thrive in France and beyond.
Do you feel we have missed a forthcoming trend or an important French Femtech startup?