Cashing in on Femtech and the Female Consumer Opportunity

by DIANA DORAHY|30 November 2020

In the half century since women joined the workforce en masse, they’ve come a long way. Not only do they make up half of all workers today, they now control 70% of consumer spending. But, despite the increasing influence women have in shaping the world economy, large parts of the female consumer opportunity remain untapped including the burgeoning FemTech industry.

This was the main theme during the first roundtable session at the recent Female Funding Fair hosted by Next Chapter Raise in Hong Kong. The discussion featured a panel of experts from throughout Asia Pacific including Karen Wong, Chief Diversity Officer from Pan-Asian venture capital firm, Gobi Partners, Maaike Steinebach, General Manager of Visa in Hong Kong and Macau, Tanya Rolfe, Co-managing partner at HerCapital in Singapore and Dr. Michelle Perugini, Co-founder of Presagen in Australia.

The FemTech industry alone is growing exponentially and is on track to become a $48.5 billion dollar opportunity by 2025. But to really understand the potential benefits, you have to first define it. Femtech means different things to different people but essentially it’s any device, application or service that uses technology to focus exclusively on womens’ health.

It’s still relatively new but in the short time FemTech has been on our radars, we’ve tended to see advancements in just a handful of subcategories namely, fertility and menstrual care. But there are plenty of other areas for potential investment success including menopause and ageing to name just two. According to Steinbach, the first thing we have to do is stop seeing these as womens’ issues.

“Some of these are still highly stigmatized and taboo subjects plus women tend to talk about these topics exclusively with other women. We need to broaden this conversation, men are affected by issues like infertility and menopause too”.

And it’s not only our definition of women’s health that needs to widen, it’s how we define women as well. Karen Wong says we need to take into account what she terms intersectionality or the interconnectedness of social categories such as race, gender, class, etc. The needs, motivations and spending power of a retired, seventy year old woman in rural China is much different to a thirty year old single female executive in Tokyo. Plus, says Wong, today’s understanding of women’s health and wellness has evolved to encompass beyond the physical, and includes emotional, spiritual, mental elements as well.

Getting a better social understanding of the female health space is important but putting the spotlight on FemTech and gender lens investing also makes economic sense. Today, 90% of women make medical decisions for the whole family and 75% of women are more likely to use digital tools for healthcare than men. In Asia, Steinbach says the purchasing power of women is going to become even more important over the next 10-20 years. In China alone, three out of every four purchases are made by women. These factors create an unprecedented opportunity for investors to tap into the “SheEconomy” through supporting FemTech startups as well as those targeting female consumers.

In a Chinese market context the SheEconomy is made up of 400 million women between the ages of 20-60 and is currently valued at $1.5 trillion.

“China’s female consumers are expanding into a diverse range of economic segments, ranging from cosmetics, personal care, pet products, and into traditionally male-oriented products such as alcohol, automobiles, and sports. This increasingly active consumer base is only growing, providing a huge opportunity for businesses across the globe”, says Wong.

In some places, particularly where there’s an established startup culture, entrepreneurial mindset and good capital flow, we’re starting to see female founders gain traction and support from public and private corporate as well as government stakeholders. Still, a lot more needs to be done. Michelle Perugini, Co-founder of Presagen, an AI open projects platform, says we’ve actually achieved a lot with very little but the space is still wide open.

“FemTech is generally poorly understood and the women’s health space is completely untapped. You need the whole ecosystem to work and that means helping founders throughout a business lifecycle including when it comes time to scale. There are a lot of good ideas that fail because women aren’t given the funds to keep viable businesses alive”.

Part of the challenge says Perugini is a lack of understanding of the women’s health space by male dominated funds and at times a lack of empathy.

“I once had a fund manager ask me what the big deal was for a woman to go through six rounds of IVF versus two. After all, he said, they’d eventually be walking away with a baby. Aside from cost, he had no idea of the emotional and physical toll each round takes on a woman to say nothing of the fact that IVF is not a guaranteed path to parenthood”.

Beyond that, Perugini says investors should also be thinking about the interconnectedness between FemTech subsectors. For example, there’s a collective market opportunity for treatment of say, endometriosis and fertility.

One of the most exciting areas for female entrepreneurs, female consumers and the FemTech industry is in China’s Greater Bay Area (GBA) taking in nine cities and two special administrative regions in South China including Guangzhou, Shenzhen, Macao and Hong Kong.

“This region will have a total population of over 70 million people, and a GDP of $1.6 trillion”, says Wong. “With so much government resources being set up around GBA, we’re starting to see exponential growth in the number of unicorns, venture capital funds, R&D efforts, and talent available, and it’s just in the early stages of development”.

So, where to from here? How do we help level the funding playing field particularly in the FemTech space? Tanya Rolfe, co-managing partner at HerCapital in Singapore says there’s plenty of motivation in wanting to get women more than the 3% of global allocated VC funds they received last year but making inroads is difficult.

“We haven’t seen any real changes to the structure and makeup of traditional VCs since 2012. One of the most important ways to do it is to create more female VC funds”.

HerCapital exploded onto the funding scene this year with the aim of raising $10 million to invest exclusively in women-led businesses. They say one of the reasons we need female-driven funds is to cater for the way women do business.

“A gender lens fund is critical for helping female founders to emerge. VCs typically go for unicorns, they look for hyper-growth but women tend to build moderate growth companies. We also have to go beyond the pitch and come up with different metrics and models of success”.

Pitching has been a significant challenge for women gaining access to funds and the panellists agreed the main reason for that is bias. Prevention versus promotion style questions have been an ongoing issue but so too has the prescription approach which has put confidence at the centre of success.

“There is definitely a confidence gap and that’s worked against women during the pitch”, says Rolfe. “Instead, they should lean into their vulnerability and be knowledgeable about their area of expertise. Confidence should run secondary”.

Perugini agrees. “Confidence expresses itself in different ways including authenticity. Lean on your experiences, women tend to be understated overachievers and don’t like to talk about themselves. Pitch your passion and your vision and not in a pre-prescribed way. That won’t appeal to investors en masse but that’s fine – you need to find an investor who works for your company”.

Panelists agreed that there’s no quick or easy fix in tackling the confidence gap but it begins with education. Wong argued that one of the reasons the gap exists is because of the way gender roles are shaped by our environment and education. The only way forward is to create a communication bridge. When it comes to FemTech and the female consumer opportunity that means approaching female founders and women-led businesses with openness, empathy and understanding.  And with $48.5 billion up for grabs in FemTech alone, surely that has to be a formula for both social and economic success? It’s worth a shot, anyway.