Transforming FemTech: Investment Trends and Future Market Growth

Investment in women’s health has long been overlooked.

This shouldn’t surprise you.

As I discussed in Part 1 of this women’s health series, until recently, the mainstream view of women’s health was limited to reproductive and gynecological health. It’s now recognized that women’s health encompasses many physical and mental aspects essential for overall well-being. Consequently, private investment in women’s health is accelerating globally—but still not enough.

In this article, I’ll highlight the current state of the women’s health market (“FemTech”), dive into market predictions, and explore the societal impacts of the growing investments.

The Current State of the FemTech Market

The FemTech space is experiencing a surge in innovation and investment. VC investment in U.S. and European women’s health companies has steadily increased, from $511 million in 2018 to an estimated $1.7 billion in 2023. Unlike the broader digital health sector, which has seen a funding cycle “reset” characterized by declining investments, the FemTech market seems to be thriving.

In fact, the change in VC investment in women’s health compared to the 2018 baseline was up 314% in 2023, while overall healthcare investment was up only 28%. According to Rock Health, Q1 2024 saw seven raises for women’s health digital health companies, totaling $105 million, a significant increase from $73 million across seven deals in Q3 and Q4 of last year.

Investors are no longer focusing solely on the reproductive space but are also investing in advanced primary care and gynecology, oncology, pelvic health, and menopause. Prominent women’s health startups like Maven and Kindbody are expanding into menopause and mental healthcare. Menopause as a category received $22 million in funding in 2019, nearly tripling to $66 million in 2023. Additionally, the launch of the Wonder Women Collaborative—a collective of digital health startups addressing women’s health needs—highlights the growing interest in the space.

However, NIH funding is still lacking. The graphic below illustrates that conditions predominantly affecting women often receive significantly less funding compared to those affecting men, despite having a higher disease burden. For instance, diseases like Alzheimer’s, anxiety disorders, and breast cancer, which disproportionately affect women, show a substantial funding gap compared to male-dominated conditions like liver cancer and prostate cancer. This underfunding leads to fewer advancements in understanding and treating these conditions, perpetuating a cycle of inadequate healthcare for women.

FemTech Market Predictions

Looking ahead, the FemTech market is set for significant growth.

Market analysts predict that by 2031, the FemTech sector will reach a valuation of approximately $130 billion, driven by advancements in personalized health solutions that leverage AI and machine learning. This will be double what the market was valued at in 2021.

One of the most exciting predictions is the expansion of FemTech into untapped health domains. Beyond reproductive health, significant investments will be funneled into areas such as cardiovascular health, osteoporosis, autoimmune disorders, and mental health. This shift will improve health outcomes and open new avenues for innovation and investment.

Public sector funding for women’s health research is also expected to substantially increase. For example:

• The Novo Nordisk Foundation, Wellcome, and the Bill & Melinda Gates Foundation have already committed $300 million over three years to advance global health equity.

• President Biden signed an executive order in March, pumping money into women’s health research through the Fund for Women’s Health Research at the National Institutes of Health (NIH). The executive order will set aside $200 million in 2025 to fund new, interdisciplinary women’s health research. In the long term, President Biden urges Congress to invest $12 billion in this fund.

• The Advanced Research Projects Agency for Health (ARPA-H) Sprint for Women's Health committed $100 million to transformative research and development in women's health.

Dashevsky’s Dissection

I find the evolving FemTech landscape to be both promising and indicative of broader systemic challenges. Don’t get me wrong, the increasing investment in women’s health is a crucial step forward to address the long-standing oversight in this field. However, while the growth in private investment is commendable, it’s not enough to meet the vast and varied needs of women globally.

From a medical perspective, the broadening focus beyond reproductive and gynecological health to include cardiovascular disease, osteoporosis, autoimmune disorders, and mental health is essential. And the current trend of increased VC investment, as highlighted by the impressive growth from $511 million in 2018 to $1.7 billion in 2023, reflects a positive shift. However, the disparities between men’s and women’s startup funding are concerning. In one McKinsey report, the authors found that 11 startups focusing on erectile dysfunction raised $1.24 billion between 2019 and 2023, while 8 startups focusing on endometriosis raised $44 million.

Lastly, the notable commitments from philanthropic organizations and the executive order to boost NIH funding are positive steps, but the scale of the actual investment needs to be much larger. As I said in the prior newsletter, women represent more than half the population, but only ~11% of the NIH’s budget is allocated to women’s health research. Biden has requested Congress to approve $12 billion to fund women’s health research, but researchers will only see $200 million next year (more discussion about policy in the next article). 

In summary, the FemTech market is undergoing significant transformation and growth, driven by increased investment and a broader recognition of women's diverse health needs. While VC investments have surged from $511 million in 2018 to an estimated $1.7 billion in 2023, and new initiatives are expanding the focus beyond reproductive health, funding gaps and disparities in research support remain significant challenges. The projected market growth to $130 billion by 2031 and increased public sector funding are promising, but much more investment is needed to address the vast and varied healthcare needs of women globally.

This article was part one of three in a series on Women’s Health. The full whitepaper is below, click the button.

RESIDENCY REFLECTIONS

Reflections on my medical training, capturing the nuances and human connections that define our profession, going beyond the science.

Become a Huddle+ member to access high-yield content on healthcare processes and industry trends, giving you deep insights and helping you stay ahead of your peers.

Browse some of the content 👇️ 

I give a nice discount to physicians, trainees, students, and providers (just email me for a discount).