6 Dec, 2021
Femtech enjoys funding boost as workers demand fertility, family benefits
By Morgan Frey
Demand from female employees for virtual fertility and pregnancy care is driving employers to offer these services.
Femtech fundraising has almost doubled this year as investors seek to cash in on surging demand for tech-based women's health services from both employers and mothers-to-be.
U.S. startups in the space, which range from on-demand telehealth services for women's health needs to family benefits platforms, raised $1.3 billion in the first three quarters of 2021, compared with $774 million for the whole of 2020, according to digital health venture firm Rock Health.
"There's a long way to run," Gina Bartasi, CEO and founder of fertility support company KBI Services Inc., which operates as Kindbody, told S&P Global Market Intelligence. "You're going to see more capital invested and a bigger market opportunity in the private and the public equity markets for sure."
Direct-to-consumer digital health company Roman Health Ventures Inc., which operates as Ro, leads this year's deal list with $500 million of funding, while on-demand women and family clinic Maven Clinic Co. — whose investors include Lux Capital Management LLC — and Tia Inc. both raised $100 million or more last quarter. The fundraising boom partly reflects greater corporate interest in female-focused benefits, with the share of large employers offering virtual fertility care services, for example, set to almost double to 55% by 2024, according to a survey by membership body Business Group on Health.
"Women have more on their plates than ever before and keeping them in the workforce — and thriving in their careers — calls for female-oriented benefits," said Dmitry Gurski, CEO and co-founder of menstrual tracking app company Flo Health Inc. The company, which offers global wellness benefits for women that employers can utilize, raised $50 million in series B funding in September.
In another sign of growth, the femtech sector has also attracted M&A activity. Ovia Health Inc., which provides mobile apps for women and families, was acquired by diagnostics-maker Laboratory Corporation of America Holdings
Ovia Health CEO and co-founder Paris Wallace told Market Intelligence in September that the merger with LabCorp was an indication that health tech targeting women and families should be a key part of traditional healthcare companies' strategies.
The femtech sector has garnered more attention as the pandemic continues to highlight inequities in the care available across the U.S., including women's health, Rock Health COO Megan Zweig told Market Intelligence.
"There's this elevated consciousness around what women's health means and how we improve the degree of accessibility," Zweig said.
Many women are now looking for more holistic support — such as access to an entire care team — when it comes to pregnancy and postpartum care, Zweig noted, with companies finding success when they can cater to this demand.
The parallel growth of telehealth and remote monitoring medical devices during the pandemic has made fertility and pregnancy treatment more accessible and affordable. Modern Fertility, for example, offers a hormone test that can be completed at home or in a diagnostics lab for a much lower price than those ordered by a physician, while Tia provides a mix of virtual and in-person visits for a variety of women's health needs, from primary care to gynecology, as well as online access to a virtual care team.
Employers respond to demand
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Kindbody, which has received funding from Alphabet Inc. venture arm GV Management Co. LLC, offers virtual consultations for fertility services such as egg-freezing and IVF as well as in-person clinics in some major U.S. cities. When CEO Bartasi started her former company, family and fertility benefits platform company Progyny Inc., six years ago, many investors assumed that only large employers like Google or Facebook could afford to offer a fertility benefit to their employees, she told Market Intelligence.
Today, employers of all sizes are offering these benefits, Bartasi said.
"It really is being driven by demand from the member population," the CEO said. "A lot of it is being driven by the LGBTQ+ patient population, which has inadvertently been discriminated against historically when it comes to family building, so they're insisting on it [and] young professional women are insisting on an egg freezing fertility preservation benefit."
Family-forming benefits, including offering increased virtual health services for prenatal care coaching and fertility care, has become one of the top focus areas for employers, Business Group on Health CEO Ellen Kelsay told Market Intelligence. "Disparities in maternal/birth parent care are well-documented, and supporting all paths to parenthood is now commonly seen as fundamental to inclusive benefits," Kelsay said.
Uneven funding
For many founders of femtech companies, the newfound attention from investors and employers has been a long time coming.
"What you hear out of female founders is 'finally,'" Kindbody's Bartasi said. "There does seem to be this big sigh of relief [from] those that have been working in the industry for a long time."
The funding is not spread evenly, with companies that provide primary care or fertility services raising more money than more specialized entities, which tend to be in the earlier growth stages, Rock Health's Zweig said. These early-stage startups include companies focused on menopause and perimenopause, as well as behavioral health specifically for women's needs.
The hope for the future is that there will be a greater expansion in some of these emerging spaces beyond the more established fertility and pregnancy offerings, Zweig added.
Bartasi pointed to the recent funding rounds for Maven, Tia and fertility benefits platform Carrot Fertility Inc. as examples of the dollars flowing into the women's health sector. "I don't think there's any question today that femtech is no longer niche."