Venture investing in elder tech

Senior citizens are not early adopters of new technology; many of our 65+ friends and family might not use much tech in the first place. That said, two-thirds of America’s 50 million seniors use the internet and more than 40% own a smartphone, according to a 2017 Pew study.

So where’s the disconnect? Why are modern software companies largely non-compatible with one of the nation’s largest demographics?

Starting with day-to-day care

The most notorious venture-funded elder tech startups were historically focused on building better healthcare and day-to-day living solutions. Honor built a managed marketplace for in-home care; YC startup GoGoGrandparent is Uber for people who don’t use apps; Umbrella* helps seniors get tasks done around the house.

The concept behind these companies is that daily basics are the root of other problems affecting seniors. If you have any issues with your home or mobility, for example, you end up exposing yourself to scams that frequently plague seniors, as well as health and safety risks. That’s not to mention the financial burden — most retirees have a modest budget or fixed income. Even if a service like TaskRabbit is somehow accessible to a senior, it’s not affordable in the long-term when lifespans and future costs are impossible to predict.

Breaking the dam: software in elder tech

Although most mobile app and web startups heavily skew toward millennial and Gen Z audiences, some organizations have built out reliable UX strategies to become more amenable to seniors.

Virtual Senior Center, a dead-simple application in which many users log two or more hours per day, is proof that with the right design patterns, seniors meaningfully engage with software platforms.

For context, Facebook users spend an average of about 45 minutes per day across web and mobile. Mark Zuckerberg can only dream of the level of engagement that Virtual Senior Center commands. This begs the immediate question: If Virtual Senior Center can get it right, what’s stopping other startups from tapping one of the biggest markets in America?

Senior product design

The challenge of building toward the senior market is twofold: Both design and distribution require strategies different from what most tech companies have the experience or infrastructure for.

Most Twitter users or TechCrunch readers are familiar with tabs, hamburger menus and the iOS Notification Center, but they aren’t intuitive for everyone. What you’ll realize less immediately, however, is that modern UIs are built that way for a reason. Tech companies maximize engagement by optimizing for feature depth and elegance. It would be a disaster to take design inspiration from the Jitterbug (the “cell phone for seniors” that Best Buy recently acquired for $800 million) if half of your customers are in their twenties and thirties.

For a concrete example of this effect, visit gogograndparent.com. Web design that offends our stylish sensibilities is actually a deeply thoughtful approach that prevents confusion and builds trust through simplicity.

The Silicon Valley distribution playbook is often equally helpless. Advertising on Facebook, YouTube or even the NYC subway does not scale. Viral growth, the Holy Grail of distribution, is incredibly difficult to materialize in a world where seniors are the loneliest and most atomized cohort alive.

Elder tech startups end up experimenting with a number of traditional channels, including partnerships with senior living homes, radio ads and even direct mail (name a venture-backed mass-market company that has sent you a physical letter!)

These challenges leave both early-stage founders and Big Tech product managers with mutually exclusive paths: go mass-market and build a normal product, or give up every nonessential feature and design pattern for the sake of senior accessibility.

“Uber for X” may be a startup idea-generator of years past, but “X for seniors” may be an excellent way to identify opportunities going forward.

Elder tech and the venture capital ecosystem

As you might imagine, a large portion of VC dollars are allocated toward senior-specific healthcare plays. Chicago-based investment bank Ziegler partnered with health firm Link-age to form a private equity fund focused on the “longevity economy,” with more than $60 million in committed capital. Third Act Ventures makes early-stage bets in everything relevant to seniors. Trail Mix Ventures was founded to “invest in the future of living well” across all demographics. Interest in the space is certainly heating up.

Andreessen Horowitz was perhaps the first prolific multi-stage fund to grab headlines with a large bet on a senior-specific tech company. They led a $20 million Series A in Honor, the previously mentioned home care marketplace that has since raised north of $100 million from firms such as Thrive Capital.

To complement the vertical upstarts and SV born-and-bred investors, traditional institutions have kicked into full gear. In 2015, AARP set aside $40 million to form a VC fund focused on care. Also notable is their innovation arm, which has worked on everything from NLP to VR to better info curation.

There remain a number of unsolved questions in the space beyond just product design. Who pays for senior care? How will the technology integrate with healthcare and financial providers? Can mass-market products truly accommodate seniors, or are we stuck building standalone products from scratch? Both investors and entrepreneurs will have to take an integrated approach, and that starts with collaboration between everyone described above.

*Disclosure: The author of this post owns a small equity interest in Umbrella from his time spent as an employee at the company.