London-based seed fund LocalGlobe is incredibly active at the early-stage end of the startup pipeline with a broad focus across multiple sectors and areas, including health.
We interviewed partner Julia Hawkins about the opportunities and risks related to femtech investing in light of the fund’s early backing for Ferly, a female-founded startup with a subscription app that describes itself as an audio guide to “mindful sex.”
The startup says its mission is to open up conversations around female sexual pleasure and create a place for self-discovery and empowering community — touting “sex-positive” content that it says is “backed by research, written by experts, and personalized to you.”
The interview has been edited for length and clarity.
TechCrunch: How do you define femtech?
Julia Hawkins: ‘Female health’ is more what I think about when I think femtech per se — rather than [solely] female-founded businesses.
Are you seeing an uptick in femtech pitches?
I don’t necessarily think that I’ve seen an increase. I’ve been with LocalGlobe for two years and there’s been a steady flow of these kinds of businesses… There’s been more focus on the category, but I think [pitch volume has] been pretty consistent over the time that I’ve been here.
How does the fund think about femtech?
I think we’re still very bullish on the category in general — it’s just we are — from a LocalGlobe perspective — we’re investing across all sectors, not just health, not just B2B or enterprise. We’re literally looking for the best U.K. founders, the best U.K. businesses that we believe will become iconic over the lifetime… we invest very early and are then very hands-on, so I wouldn’t say it’s a reflection on the category or anything like that.
Is Ferly LocalGlobe’s first femtech investment?
I would say it’s the one that is definitely most targeted towards women. But I guess the way that we look at Ferly is it’s not only targeted at women — it’s really trying to promote a better experience when it comes to pleasure, and yes, the initial target market is women, but obviously it relates to both women and men — and everything in between.
Tell us how you came to invest in Ferly and what about their pitch stood out?
Absolutely there are many other companies that we’re looking at, but in LocalGlobe 8, which is the fund that we invested Ferly out of, that was just the one company that we felt both fit our fund strategy as well as obviously the way that we’d gotten to know Billie [Quinlan] and Anna [Hushlak], the two co-founders. They came through Zinc, which is our accelerator program. So we invested in them very early — in their pre-seed, effectively. And are continuing to work with them now, and they’ve obviously gone on to raise their seed and are planning to move to LA, which is where they see great demand for this type of product.
They were founders who met on our accelerator program, and for me what stood out, first and foremost, the first interaction that I had with them was with Billie the CEO… It was nearly two years ago that I met her and she was already then talking about what the experience is for women in terms of their pleasure. This pleasure gap that exists for many women and the approach that her and Anna and their third co-founder at the time had been discussing — which was, it’s a science-based approach, in terms of the importance of pleasure to our overall well-being — and I think having Anna on the team, who has a PhD from Oxford and definitely more on the science side, of really understanding what the role is of pleasure and therefore being able to build a pretty unique proposition that’s steeped in science.
I think for us that was really important — that it’s the amalgamation of both biology and the science around biology, as well as the social framework around it, so bio, psycho, social — and then the overall impact of your mental well-being because, Zinc, the mission that they met on, was all about improving the mental health of women and girls in the developed world.
When you’re investing that early you’re investing in the team and I just thought that they both had a unique and interesting insight and really thought that they had a potential to be able to build something. And they were — during the program — they were already able to show us an MVP, which obviously has evolved significantly since then, but already showed great promise.
We always look for founders that have a unique perspective on a problem and they, given their personal background and experience, really felt like they had that. And then their ability to work together — very complementary skill sets, obviously. And really impressive in terms of the ability to both build the team and then scale the product.
It’s interesting the science side was so important for you — given Ferly is a product that could, to a degree, be categorized as entertainment…
For me, it’s about credibility and authority — which I believe comes from science. And I believe that’s why Anna, for example, is so credible within this space. And the experts they’ve reached out to and worked with. Absolutely the expression thereof — the app itself — you can say has obviously some entertaining components but actually the mission is very serious. So for me, it’s actually about bringing credibility to a proposition and something that actually has been very taboo. So what is the research? What is this telling us? Why is this so important? To women and men — and people of our time.
There’s a sense that femtech startups still suffer from a relative lack of investment, although over the last five-plus years financing for startups building dedicated products for women has been increasing — so it’s now in a ‘catch-up’ phase, perhaps. Why do you think there’s been this funding gap/lag? Maybe there’s a point that women’s health generally suffers from a lack of research versus men’s health, but it’s interesting to see a gap for products with a potential addressable market of ~half the population…
I do think that it’s definitely picking up. Even if you look at alternatives or other companies that are entering into this space. If we just think about the arena around pleasure, even one of our companies, Soda — which is an e-commerce marketplace — one of the products that’s sold the most were, effectively, vibrators when they launched in the U.S. So we see many indications that this is an area that is obviously becoming more important and less taboo.
But I also think there’s a perception that male investors didn’t understand the space. There was an article just a couple of weeks ago in Sifted — the founder, called Shardi [Nahavandi] who is developing her company called Pexxi, and they basically enable women to get a contraception pill that is essentially personalized to them — and in this article it was saying she had a really hard time pitching this proposition to male investors — and I guess that may be true.
There are maybe some investors that simply find it really difficult to engage with this topic. But I also think that there are many more investors now. For example, in Ferly, the investors that we had alongside us were [Ada Ventures’] Matt Penneycard and Check [Warner] — they just launched their new fund but at the time the first male investor around the table was Matt, and obviously Mike Acton Smith also participated. There were other angel investors who were all men. Who, even at the time that we invested — which was nearly a year and a half ago — were engaging on the topic and saw that this was really important. And the same we saw now in terms of their seed round which was led by K Fund, a Spanish fund, and it’s Pablo [Ventura] who’s led that deal.
So I just think that the investor community landscape is also evolving really quickly. And I think investors are adapting to the time. So I guess that my personal impression is that actually now it’s not just Check and I around the table with Ferly, there are male investors and many other investors who are passionate about this area.
Do you expect investment in femtech to keep growing — that there’s still a lot of catching up to do?
That’s what I think — definitely.
Are there any particular femtech subcategories — or any particular product types — that are more interesting to the fund and to you where you see the most opportunity over the next few years?
You can also look at it in terms of ‘stage of life.’ There’s been quite a lot of focus around fertility and also around then helping new mothers. There’s now coming some services and products towards that — but I guess in terms of this transition from being of the age where you’re not necessarily thinking about children and then there’s a flip that happens pretty much overnight where you’re trying to not get pregnant and then you really want to get pregnant and you want it to happen now and I guess there’s been a lot of activity there, around fertility.
We’re also now starting to see more in terms of menopause and I think that’s a really interesting time in terms of the next transition. That’s definitely an area I’m looking at. There are some companies that have approached us recently — I guess if you’re asking me for the trends that we’re seeing, it’s definitely more the times of people’s lives. I also think that there’s a lot of work to do in terms of the use of data and really understanding women’s health — I guess Moody [Month app] has done that. Also I think what Pexxi are doing in terms of personalized contraception is also really interesting. But I guess, from our perspective, it’s not just the problem but also the stage that we invest at — it’s also very founder-driven.
Some femtech products can be very novel and experimental. At the same time there may be very little dedicated regulation on the claims being made. Given you’re investing so early, how do you approach assessing novelty in this category? Do you do more due diligence than you would do, for example, for a general consumer tech startup?
Definitely, but I do think that as a fund we have an overarching thesis that over the next 20 years we believe that the most important companies are likely to be built in spaces that are regulated. We’ve actually seen huge consumer businesses being built over the last 20 years — for example, Spotify, Netflix — but they also, in terms of what they’re targeting, it’s really discretionary spend, whereas if you look at your wallet as a consumer, your non-discretionary spend — i.e. the spaces related to housing, related to health, related to education, mobility — these are huge markets, that are all regulated. Or if you’re very early, it may not be regulated yet, but we definitely take the view that our companies need to be thinking about regulation and ethics themselves and we help them with that.
[From an investor perspective] I look at sensitivity towards that — I look at to what extent is this space regulated, how is it regulated, what needs to be put in place in order for this company to succeed? But I wouldn’t say that it’s a deterrent.
Have you ever turned down a potential femtech investment because you had specific concerns about the claims being made for the product — or is it just too difficult to tell when it’s so early-stage?
I think it’s really difficult to tell. I don’t think we can tell at our stage — the stage at which we invest.
From a user perspective, femtech products can also be very high stakes. And we have seen some missteps in the category, such as overly aggressive marketing tactics that aren’t necessarily appropriate — such as where a digital contraception might only be a good fit for a particular type of user. How does the fund support femtech founders to navigate the various sensitivities involved in building such novel yet high-stakes products which also may not really be being directly regulated yet?
We have experts within our network who have a long experience of working within compliance and ethics within very established companies and they help our companies navigate this — and thinking around what is it that we need to put in place from very early on.
Even just thinking about GDPR [Europe’s General Data Protection Regulation]… it’s a minefield to get your head around, and so as a founder we definitely want them to have this sensitivity towards it — but we’re also not expecting them to be experts.
Some femtech ideas seem as if they could be transformative for women. Others leave you wondering if it’s more snake oil than science. There’s a risk of pseudoscience creeping into this category, isn’t there?
Of course.
Do you think the challenges of independently verifying some of the novel/nuanced health/wellness claims being made by femtech startups has been a factor putting off investors?
It adds to the complexity of [investing in] the sector for sure… It always depends on how each investor is looking at and assessing individual opportunities and the kinds of risks that they see and the extent to which they can get comfortable with those risks.
Would it be helpful for there to be more regulation around digital health products?
It’s not an area that I’m currently spending time on but… I think definitely [regulators] having an open dialogue or being open to having communication with startups that are experts or are trying to build businesses within a field [is a good idea] — and I mean we’re seeing this in government where they’re actively [engaging] — within mobility so not necessarily within health.
But I think within various government departments they are absolutely open to and alive to the fact that this is taking place, and I guess I believe that the companies themselves, because it’s likely that the regulators are obviously going to take longer, they just need to be alive to the fact that regulation will be coming and think about how would they regulate themselves until that regulation is properly in place?
Where do you see femtech investment going this year — in terms of which elements/trends do you see investors paying the most attention to?
I think the ‘time of life’ that have been underserved — so menopause, I think we’ll see more investment coming this year. And also more personalization specifically targeted towards women is another one that will come.
What advice do you have for startups building femtech businesses to help them stand out and catch your eye?
I’m open to receiving any startups or any founders that are interested in a chat within this category. I’m always open to conversations. We run office hours — assuming that this category is predominantly founded by female founders, we also run specific female-founded events and are always just looking for fantastic female founders building businesses with global potential that will improve the quality of women’s health more broadly. So very open for people to reach out to me.
Do you think for femtech startups to be credible they should really have female founders?
I actually don’t, but I guess most of the ones that I’ve seen have — but actually I’m encouraging all genders to look at the sector for sure.
So you’d be open to pitches from male founders building female health businesses too?
Absolutely.