Index Fund’s portfolio is driving long-overdue innovation in femcare

'It’s a category that’s been underserved for a long time,' says principal Hannah Seal

U.K. startup Daye is rethinking female intimate care from a woman’s perspective, starting with a tampon infused with cannabidiol that tackles period pain.

It’s also quietly demolishing the retrograde approach to “femcare” product design that not only peddles stale and sexist stereotypes, but also can harm women’s bodies.

Those perfumed sanitary pads stinking out the supermarket shelf? Whomever came up with that idea has obviously never experienced thrush or bacterial vaginosis nor spoken to a health professional who could have told them vaginal infections can be triggered by perfumed products.

The missing link: There are few people with a vagina in positions leading product strategy. And that’s the disruptive opportunity female-led femcare businesses like Daye are closing in on.

The Index Ventures-backed startup is shaking up a tired category by selling the flip-side: thoughtfully designed products for period care that do no harm and take aim at actual problems women have, starting with dysmenorrhea (otherwise known as menstrual cramps). The overarching strand is building community to help women better understand what’s going on with their bodies and reinforce shifting product expectations in the process.

We chatted with Index principal Hannah Seal about the fund’s investment in Daye and to get her thoughts more broadly on a new generation of female-focused startups that are driving long-overdue innovation.

The interview has been edited for length and clarity.

TechCrunch: Femtech can be a very broad category. I’ve seen Daye, for example, called ‘femcare.’ So tell us how Index is approaching and thinking about this category of products focused on women?

Deal: I think everyone defines femtech differently. I guess the way it’s traditionally been used is to describe products or services targeted towards women’s health. Which I guess is where Daye comes in. But I see it as sort of products or services or software where the audience is predominantly women. So whether that’s around financial services or employment or other kind of products or social networks or services — wherever the target audience is women, that’s how I look at the category.

So it’s fair to say Index has a very broad approach to this category rather than being fixed on particular sub-focuses within femtech, whether theme-related or product-based?

Yeah, definitely. We look at it as a huge potential area. Women make up 50 percent of the world and 80 percent of household consumption, so it’s definitely an area that we’re not ignoring. And where we see that it’s going to grow and probably be more important focus area for us as well.

How many femtech investments has Index done to date?

I guess if you define it more broadly as products or services that are focused on women, we’ve got quite a wide number. We invested in a company called Peanut last year, which is a social network for women. We obviously had Glossier in our portfolio where the target audience is predominantly, although not exclusively, women.

Another is a company called Tiney — which is a UK based company that’s building a childcare platform. So we see that — women make a majority of childcare decisions; childcare predominantly falls on women, whether or not they’re working — so we bucket that under this category.

So if you look at the broader definition, I’d say we have a very large number of investments where the target audience is predominantly female.

Have you been seeing an increasing number of femtech pitches or is it holding fairly steady?

I’d say we’re definitely seeing more. Even in the four years since I’ve been at Index I’m certainly seeing more pitches from women now, and specifically women building businesses for other women. I guess most or many of the best entrepreneurs come from solving problems that they themselves have. As more and more women become entrepreneurs, we’re definitely seeing that trend. There’s going to be more products and services catered towards women.

So you’re expecting to be investing in more of these types of startups going forward? And we’re likely to see an increasing proportion of the portfolio made up of this type of company?

Yeah, I think that’s fair to say.

There’s been a lot of talk about how much money is flowing into femtech. Do you agree it is still very underinvested?

Definitely. Women for too long have been a blind spot for businesses, I think. And so much new innovation that’s come about in the past few decades has been started by men and predominantly for men, so I think there’s definitely going to be more businesses being started both by women and for women.

The VC space is still very male-dominated, which some have suggested has held back investment in this category. Do you think some male VCs still struggle to understand the opportunities for investing in products for women?

I think in a way that’s natural. If you haven’t experienced a problem yourself, of course it’s always going to be harder to empathize and to understand what the problem being solved is and whether the solution being offered is the right solution. So I think that’s true to say to some degree, but I definitely see more of an open-mindedness across the VC landscape — both male and female investors — to the importance of this category. And open-mindedness to invest in it.

Let’s talk about Daye. How did you first learn about the startup and what attracted you to their pitch?

I’d actually met Valentina [Milanova, Daye founder and CEO] several years before. When she was working with Techstars [as a business development associate]. So I’d known her already. And when she started Daye, she reached out to me and said: ‘Hey, let’s grab a coffee. I want to tell you about what I’m building.’ So that’s how it came about.

I think what excites us about the category, more broadly, is that — which is true for a lot of femtech investments — it’s a category that’s been underserved for a long time, and a pain-relieving tampon as a flagship product is now where she’s starting. Period pain is something that nearly half of women experience, but if you look at the market of solutions for women with period pain, it’s basically painkillers and that’s about it. Or stay at home with a hot water bottle. There’s been virtually zero innovation in that category, so I think we saw it as a massive problem and an overlooked problem. And the broader vision of a platform for women to understand their health better is compelling and obviously a massive opportunity.

A pain-relieving tampon is a pretty novel idea in some senses — perhaps because there’s been so little innovation for so long. Was there a lot of due diligence involved in assessing the product or was Index more taking an open bet on a concept that sounds logical and promising?

Well, we invested in a pre-seed round. The company was very early. So at that stage the bet is always on the founder and on the idea and the market opportunity. But yeah, we obviously did plenty of due diligence. And Valentina’s approach from the start has been around clinical validation and making sure that everything is backed up and making sure she’s got a scientific advisory board and the right people involved in the company. So clinical trials underpin a lot of what she’s doing. But obviously at the stage at which we invested, it was too early to see the results from that.

Whenever we invest we see it typically as a founder bet.

With this sort of femcare product, what sort of founding team do you look for in terms of background and experience? If it had perhaps been three guys maybe it would have been more difficult to make this kind of a pitch. So are there particular criteria you think makes sense for this category in terms of founding team?

I think it’s really varied. Interestingly, all of the founders that we back that fall into this category come from it with very different expertise and very different approach.

Michelle [Kennedy], for example, who started Peanut — she started it because she had a problem that when she became a mum she wanted company, she wanted friendship, she wanted people to talk to and she came from the dating world, with Badoo and with Bumble. So she intimately understood making connections. So in that respect she understood that community angle, really, really well — which has enabled her to build this really engaged community of women.

And then on the other side, Tiney — which is the most recent company that we’ve backed in the childcare space — their founding team is three men. And the CEO is a guy called Brett Wigdortz who founded Teach First. So for him his experience in education — and in upskilling an entire generation of teachers and dealing with the education side of things has been one of the reasons that we backed him because he comes from it with a real focus on education and on safeguarding — which is critical for the childcare space. And he’s a dad himself. He understands the problem.

So I think there’s a very broad range of companies within this space and different founders that will solve problems, depending on their experience. So I don’t think we see a sort of one-size fits all approach to founding a femtech startup. I think it very much depends on the specific problem you’re solving.

I don’t think there’s any specific advice that we give [femtech startups] that’s different from non-femtech startups. But obviously they’re targeted at women and women have slightly different demands. For example, women are typically more customer service-oriented — and they care more about community and referrals are a big thing for a lot of female-focused companies. For male-focused companies, referrals typically aren’t such a big thing… So I think there are different tweaks depending on what you’re doing and what product you’re selling. But there’s certain characteristics of women that makes certain tactics like referrals and influencing and that sort of thing quite important.

What sorts of trends do you think are going to be hot in terms of femtech investment over the next few years?

The way we look at it is there’s a lot of demographic and societal trends that are providing the roadmap for innovation. The first one is around women getting married and having children at more advanced ages — so fertility and women’s health more broadly is definitely going to be a big growth area. Secondly, following this, there’s more women in the labor force than ever before — I think this is true that in the U.S. women now outnumber men in the workforce so there’s definitely going to be services and support networks that will be built around that. And childcare fits into that for us. And then another thing we see is employers thinking more deliberately about how they can support women at all life stages. So you’re seeing more employers who’re offering employee benefits around egg-freezing or fertility treatment or maternity support and that sort of thing. So it’s definitely becoming a much bigger focus area for employers and they’re seeing it’s valuable to do this and to treat women well and to provide them with the services and support that they need.

Those are the three main areas that we’re looking at — and then underpinning all of it is a community angle. So have a community fit on top of all of these sectors and there’s lots of people building products and services in these three specific areas that around that you’re going to get communities developing. So that was our thesis when we invested in Peanut — was who’s going to provide the community to support women at all these different life stages. So Peanut to date has focused on fertility and the trying to conceive community and then motherhood. And they have bigger plans for menopause and other areas. But I think that’s a really important area to remember because mothers were the original social network and women are inherently sociable and community-oriented so I think there will be some really interesting communities springing up around all of this.

Menopause is an area that does seem very overlooked — so potentially an interesting one, in terms of the novel products and support communities that could be built…

Yeah, absolutely. It’s an inevitability for all women, right. We’re all going to go through this. I get it from my mum all the time — ‘what are you doing about menopause?’ So I think that generation of women that are constantly on their smartphones, that are on Facebook and they’re well connected and they’re looking for digital solutions — they’re the ones that are now starting to go through menopause. So I think that’s definitely a big opportunity to service.

Aside from direct investments, what other femtech startups have you seen that you think are really exciting?

The one that we didn’t invest in is a company called Maven in the U.S. — which actually was started by a former Index employee and it’s focused around maternity support and benefits. I think what’s interesting about it is it doesn’t just focus on before you have the baby and just after the baby when you’re going through that, sort of new mum thing, but it also focuses on going back to work — and what is the support you need once you’re back in work. Because I had a baby last year and I’ve experienced that — that having a baby is not just the pregnancy and the immediate postpartum thing. But it’s ongoing. Then it’s childcare and it’s flexibility and it’s all of those other things that come with it. And having a supportive employer makes so much difference and having that support network around you as well. So I think they’re doing some really interesting things for women.

Given how much opportunity and activity we’re now seeing in femtech, it does seem kind of incredible it’s taken the investment world quite a long time to cotton on — what would be your thesis for that? Why has it taken so long to generate this kind of momentum?

I think there’s a few different reasons. One is that… most entrepreneurs historically have been men who are solving problems that they’ve experienced as most great entrepreneurs do, right? So if they’ve experienced these problems that women have it’s hard for them to build great companies around them so I think a lot of it has been the underrepresentation of female founders. And we definitely see it changing. And I think — on the investment perspective — we’ve started to see some bigger exits in either women-led or women-focused businesses. Which I think is giving investors a wake-up call that this is a huge category.

I think Progeny was listed and is now a multi-billion-dollar company. You’ve got companies like Stitch Fix, like Glossier that are showing that you can build very large businesses focused on women. And being built by women. So I think as more of these success stories start to appear you’ll get more and more investment into these areas.

Are the femtech founders you’re talking to building businesses to IPO themselves — i.e. is there an appetite to build potentially billion-dollar independent businesses in this category — or are they thinking, “this is something I could sell to a consumer products giant or cosmetics company?”

We definitely see [an IPO] level of ambition — and they’re the sort of entrepreneurs that we back at Index. Ones that have these big ambitions that want to build something truly innovative and truly game-changing and want to build these large independent businesses. So yeah, we see that a lot and there’s definitely a huge amount of ambition coming from these founders. I’m sure we’ll get more IPOs in this sector in the coming years.

What sort of general advice do you have for femtech founders in terms of thinking about the market opportunities and how to catch an investor’s eye?

Come and talk to Index! We’re excited about the space and we’d love to invest more in it.

What we love to see is passion — especially entrepreneurs that are self-driven, solving problems that they’ve experienced, that they understand intimately, that give them a unique advantage in this space. That’s definitely what we like to see.