What top VCs look for in women’s fertility startups

A number of promising women’s health tech companies have popped up in the last few years, from fertility apps to ovulation bracelets — even Apple has jumped into the subject with the addition of period tracking built into the latest edition of the watch. But there hasn’t been much in the way of innovation in women’s sexual health for decades.

In-vitro fertilization (IVF) is now a 40-year-old invention and even the top pharmaceutical companies have spent a pittance on research and development. Subjects like polycystic ovarian syndrome, endometriosis and menopause have taken a backseat to other, more fatal concerns. Fertility is itself oftentimes a mysterious black box as well, though a full 10% of the female population in the United States has difficulty getting or staying pregnant.

That’s all starting to change as startups are now bringing in millions in venture capital to gather and treat women’s health. While it’s early days (no unicorns just yet) interest in the subject has been jumping steadily higher each year.

To shine a better light on the importance of tech’s role in spurring more innovation for women’s fertility, we asked five VCs passionate about the space for their investment strategies, including Sarah Cone (Social Impact Capital), Vanessa Larco (NEA), Anu Duggal (Female Founders Fund), Jess Lee (Sequoia) and Nancy Brown (Oak HC/FT).

Sarah Cone, Social Impact Capital

We’re interested in companies that create large data sets in women’s health and fertility, enabling personalized medicine, clinical trial virtualization, better patient outcomes, and the application of modern AI/ML techniques to generate hypotheses that discover new targets and molecules.

Historically, women’s health is a huge but underserved market. The main reason is the lack of investment in R&D. Out of the top 25 pharma companies, only 7 have women’s health pipelines, and out of those 7, the average number of drugs in the pipeline is less than 2. Additionally, federal research spending is a laughably small number (for example in 2015, 0.023% of NIH grants went to women’s health research.)

However, we’re confident that women’s health is the next great market opportunity in healthcare for a variety of reasons. Many women want children later. There is a growing recognition that women’s pain matters and differs from men’s pain. Finally, nothing encourages investment in healthcare like a blockbuster drug: Elagolix, AbbVie’s therapy for endometriosis and uterine fibroids was approved by the FDA last year.

Longer term, women’s health has a special interest: a new understanding of women’s reproductive health will generate novel insights into other domains, including longevity.

Vanessa Larco, NEA

I think the most interesting opportunities are the ones that completely change the landscape. If you’re just optimizing the current system, I don’t think there’s a venture-like outcome. There will be interesting data that comes from many startups in this space and while the data is valuable, based on my research, it has to be extremely comprehensive with a large population size, that I think on its own it won’t create a valuable business.

I’m a bit biased since I invested in Cleo, the parenting platform, but I think postpartum support is one of the most exciting areas. I pulled together a bunch of research on where the funding dollars have gone. 4^th Trimester Products & Services are the most popular VC category receiving the most dollars, with Fertility & Pregnancy in second and general women’s wellbeing in third. I figured that fertility and pregnancy would have come out as the winner in terms of VC dollars invested, but taking a step back, 4^th trimester has a bigger addressable market and a seemingly equally high willingness to pay.

It might sound hyperbolic to say most companies in the category that have raised a Series A are showing a lot of promise, but it’s true. The real challenge has been scaling, as I found only three femtech startups (excluding biopharma) have raised a Series C (Hims, Roman and Progyny), two of which are actually men’s health startups that have launched a women’s health SKU. It has not been easy for these startups to raise money, but the ones that have are showing great traction.

I think one of the most interesting parts about this sector is that the fastest growth has come from the B2B channels. While these products and services benefit consumers, there is a higher cost to acquire the consumers because these companies need to educate the consumer as to why this is a needed or better solution for them. This higher cost to acquire users can make it difficult for these D2C health startups to grow quickly so we’ve seen a shift where many of the femtech startups are now targeting the employers to cover these products/services as a benefit.

I’m curious as to how many of these “femtech” startups were funded by women VCs. Has the increase in women being hired into venture led to the increase in investments in the category?

Historically, why have women had to pay out-of-pocket for all of these products and services? While it is unfair and unfortunate, are we seeing these next generation of founders use that fact as a way to disrupt an industry that has been expensive for consumers and broken since seemingly forever?

If insurances start paying for these products/services will it help or hurt the industry and consumers? These are the questions I wrestle with myself.

Anu Duggal, Female Founders Fund

We believe there is massive opportunity in women’s health. As consumers women control $3T+ of spend related to both their own health and family health and make 80% of household decisions related to healthcare. At the same time, women in the US continue to have the highest rate of infant mortality and c-sections.

As early investors in Maven (2014), we have seen the demand for products and services that address the life-cycle of women’s healthcare needs — starting from fertility/infertility, all the way through to pregnancy and the post-pregnancy recovery experience. Kate was visionary in identifying this opportunity and since then has gone on to build a business that has attracted the best consumer and healthcare investors as partners.

Having spent time in the space, we feel that there is a strong need to have differentiated care solutions based on understanding that women’s physiological needs that are different to men’s. From an investment standpoint, we are interested in chronic disease, emotional health, depression, fertility, nutrition, offline healthcare experiences and eldercare — all specific to women.

Jess Lee, Sequoia Capital

I’m definitely passionate about the space. After looking at tons of companies in the space for 18 months, Sequoia invested in Maven.

Maven covers maternity, fertility, adoption, surrogacy, loss, and return-to-work (including breast milk shipping). It’s an all-in-one family & women’s benefit program for modern companies who want to support new parents. You get access via their app to a care concierge and a network of thousands of practitioners, from reproductive endocrinologists to lactation/sleep consultants to mental health specialists. Also great content & community.

Fertility is one step of a much longer journey towards parenthood. We like that Maven has the ability to cover the entire experience end-to-end. We also fell in love with Maven CEO & founder Kate Ryder. She’s a mom of two herself despite running a company and is authentically mission-driven to support working parents.

Nancy Brown, Oak HC/FT

Women’s health is of great interest from a number of levels:

1. Women’s control of health care spend for themselves and their families.
2. Women’s health is a significant but unmanaged spend category for employers, with significant variations in costs per birth despite limited impact on care quality or employee experience.
3. Personalized care is key to successful management of populations and women have unique needs related to reproductive issues as well as other gender affected areas of health – cardiology, nutrition, oncology, etc, (meaning that fact that someone is a woman means that prevention, diagnosis and treatment may be different.
4. Bringing care to patients where they are (virtual care @ work or home) is an important trend and we believe millennial women with demand this specifically related to how they access maternity and fertility benefits. Virtualization is also key to supporting women as they balance work and family. With 50% of all women not returning to work after their first baby we need to support the ability to be a mother and work.