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Despite 2022’s headwinds, women’s health startups did better than ever before

Seem poised to crack glass ceiling with biggest share of digital funding yet

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It’s been seven months since Roe vs. Wade was overturned, and the dust has barely begun to settle.

Politically, voters have expressed their overwhelming support for a person’s right to access abortion. Grassroots campaigns continue, and technology-wise, innovation in the wider women’s health sector is only gearing up.

But have things improved at all for the sector? Or has the souring of sentiment across the political spectrum only scared investors off? TechCrunch conducted a vibe check to see where this sector stands, and found a prevailing sense of guarded optimism.

For Oriana Papin-Zoghbi, CEO and co-founder of early ovarian cancer detection company AOA, the sector has tons of potential to grow, but raising capital remains a challenge, as some investors still think of it as a “niche market.”

However, things are changing slowly but surely: “Women still comprise the majority of investors who most deeply understand our product, but we are luckily seeing an increase in the general population who are interested in investing,” Papin-Zoghbi told TechCrunch.

She closed a $7 million seed round last year and is now raising a Series A. “We still have a very long way to go in changing opinions about the importance of investing in women’s health. We are not a niche market as 50% of the population.”

Janna Meyrowitz Turner, the founder of Synastry Capital, echoed similar sentiments. She noted that women’s health startups are looking beyond traditional venture capital for funding, turning to avenues such as family offices, corporate venture capital, and crowdfunding. She’s also heard conversations about strategic mergers and joint ventures.

“I foresee capital to healthcare companies increasing in 2023,” she told TechCrunch. “But I’m not as optimistic when it comes to misogyny in the investment and medical fields shifting as quickly as public sentiment has on things like abortion or even health benefits of the female orgasm.”

The funding for women’s healthcare companies doesn’t look all that bad, though. According to PitchBook, such startups raised around $1.16 billion in 2022, less than the $1.41 billion they raised in 2021. The good news is that the $1.16 billion is much closer to $1.41 billion than it is to $496 million, which was the amount women’s health companies raised in 2020, and $476.8 million, the amount raised in 2019. This indicates that investors didn’t revert to pre-pandemic levels and the sector is still trending upward.

In fact, women’s healthcare tech companies, also known as “femtech,” did quite a lot better in 2022 in relation to digital healthcare funding. Even though funding in the digital health sector fell to about $8.6 billion in 2022 from around $16 billion a year earlier, femtech’s share rose substantially from previous years — the sector’s share of digital health funding was 13.26% in 2022, compared to 8.75% in 2021, 7.6% in 2020, and 11.8% in 2019.

 

Data Visualization by Miranda Halpern, created with Flourish

If anything, there appears to be increased investor interest to continue funding innovation in this sector, despite the economic and political headwinds standing in the way.

Camila Caso, director of platform at Recharge Capital, said many companies are preparing for a drop-off in investment this year, not unlike what happened in 2022. As a result, many are focused on assembling the right management team to prioritize basics such as cash flow and profit margins, as well as “critical narratives” like education, social movements, and building trust with consumers.

“These factors are key to building long-term sustainable businesses in women’s healthcare, and building a legacy, rather than short-term hype,” Caso told TechCrunch. She added that, on her end as an investor, she’s seeing tighter financing options and higher customer acquisition prices for many women’s healthcare companies scaling in a quickly crowded industry.

“Since there are relatively low barriers to enter the market, we’re seeing countless femtech companies burst into the scene and struggle to differentiate themselves, particularly within the menopause space,” she said.

The U.S. FDA has a shorter approval process than its European counterpart, the EMA, and as a result, many international companies are also entering the U.S. market, she said. “The winners poised for longevity are those willing to deploy the capital in time to find their hero product.”

Politically, of course, there are still headwinds. When Nadya Okamoto, founder of the menstrual hygiene company August, spoke with TechCrunch last week, she was preparing to attend the Roe vs. Wade March in New York City’s Washington Square Park to mark the 50th anniversary of the then-historic court case. “Advocacy is very much still going and growing,” she said.

Post overturn, Okamoto says she’s noticed an increase in interest regarding people wanting to support initiatives that champion women’s health. As Turner noted, the shifting sentiments have been more so on the public opinion side, but Okamoto says public opinion, alongside progress in the private sector, can help shift the overall political landscape. “Growing up in a patriarchal world, we’re accustomed to the bare minimum of having our needs met. The more we see innovation and business happening, that understanding of the bare minimum will be raised,” she said.

Overall, the innovation and conversations have not stopped. AOA Dx is developing the first non-invasive liquid biopsy test for the early detection of ovarian cancer, while Recharge Capital is on the hunt for its hero product. Okamoto hopes to launch into retail outlets for her startup soon and is still taking to the streets, and Turner is focused on her new venture, VCsforRepro, which seeks to encourage investors to vote on important socio-political issues. Hope here is hardly eclipsed by the difficulty of funding.

“As women and advocates of women’s health, we need to continue to be loud and persistent,” Papin-Zoghbi said. “Our voices need to be heard and repeated in order to enact meaningful and lasting change in the space.”

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