Behind the Rise of Femtech: Untangling the Increased Investment in the Industry
Women have been historically underrepresented in healthcare. Until 1993, women were largely excluded from clinical trials and research for new medications. This led to a huge gap in our understanding of female physiology, how drugs affect women and the impact of dosage on side effects. Researchers analyzed studies in which women and men were given the same drug dosage and found that in over 90 percent of cases, women experienced stronger side effects than men.
Thankfully, digital solutions have emerged in the last few years aiming to plug in the research and data gap. This is the field of femtech.
Interest in femtech has been rising over the past few years. In partnership with Dealroom.co and MTIP, we’ve analyzed 440-plus femtech startups globally to better understand how technology is disrupting women’s health and impacting half of the world's population. The report finds that VC investment in early-stage femtech companies reached $1 billion in 2022 and has been on an upward trajectory in the last decade.
Below, we breakdown the key takeaways and drivers of the industry, including the increasing role that femtech investments are playing in shaping this field.
Global VC investments in femtech have increased over the last decade and peaked in 2021
Femtech companies are now worth $28 billion. Despite the historical lack of funding going into women’s health companies and femtech companies representing a small portion of the health investment, the value of the industry experienced steady growth in the last decade.
Investment into femtech startups also continued to grow in the last decade, with significant acceleration since 2013. In 2022, VCs invested $1 billion of funding into femtech startups, the second best year on record after the $2 billion raised in 2021.
However, we're still in the very early days for the femtech sector, which attracted only 1 percent of healthtech investments in 2022. Companies based in Europe, the Middle East, and Africa (EMEA) experienced a drop of 40 percent in investments compared to the bull market in 2021, while the US remained stable at 2020 levels.
US is leading by total funding amount, followed by the UK
Looking at the last five years, the US continues to maintain its top ranking and to attract the majority of femtech VC investment with $4 billion raised. There’s a significant investment gap compared to the rest of the world, with the UK and Israel following with less than one-eighth of the funding attracted by US startups. This is in line with overall healthcare spending. The US has the highest healthcare spending out of all OECD countries, spending double the average percentage of gross domestic product (GDP) on healthcare.
However, Europe continues to play an important role in femtech innovation, with five of the top countries by femtech funding amount located in the European Union.
General Health & Wellness and Reproductive Health & Contraception have attracted the most funding globally
Breaking things down by segment, General Health & Wellness leads by cumulative VC investment over the last 5 years with $2.2 billion concentrated in 112 rounds. This segment includes solutions providing clinical care and ongoing support for a wide range of women’s health conditions, including virtual clinics and mental health solutions.
Reproductive Health & Contraception is second in VC investments, attracting $1.1 billion, half the amount raised by General Health & Wellness startups. However, it ranks first in terms of the number of rounds raised at 184. This mismatch can be explained by a number of mega rounds raised by companies in the lead segment, such as Maven Clinic.
There is a similar overall trend between mentech and femtech VC investments
Next, the report analyzes investments into the mentech industry, which refers to companies offering a range of products and services that cater to specific male health needs. The report analyzed 50-plus companies focused on men’s health, which are now worth $12 billion.
Men’s health companies attracted $389 million in VC funding in 2022, with North America leading by total investment amount. Despite the difference in absolute values, both femtech and mentech companies underwent significant growth in 2020 and peaked in 2021.
To sum it up, femtech is an exciting sector that’s ripe for innovation and we expect to see continuous activity in the space. The historical lack of female participation in clinical trials and investment led to significant clinical data gaps and limited understanding of the female body. While VC funding in the space grew significantly over the last decade, women’s health still has a lot of catching up to do. Technology will play an instrumental role in bridging these gaps and advancing our knowledge.