On November 13, 2023, women’s health advocates – including entrepreneurs and investors – celebrated a positive step forward for the industry; that day, the White House announced the first-ever Initiative on Women’s Health Research. The goal of the Initiative is to engage the federal government and private and public sectors to fund women’s health, spur innovation, close research gaps, and improve diagnosis, disease prevention, education, treatment, and more.
This Initiative, however, was not the only new and noteworthy event in women’s health recently. In 2023 alone, women’s health startups saw gains in their average deal sizes, in the percentage of healthcare venture capital funding they raised, and in the attention they received. If these trends continue, 2024 could be the long-awaited and much-needed transformative year, bringing attention, capital, and recognition to this historically overlooked, underinvested, and undervalued space.
Overall, venture capital (VC) saw fewer and less valuable deals in 2023 and the women’s health sector was no exception. Women’s health in this article is defined as the U.S-based, VC-backed companies labeled as “women’s health”, “women’s healthcare”, or “FemTech” in PitchBook Data. (While FemTech is a subset of women’s health, defined as software and other tech-enabled products that cater to the health needs of biological females, the term has, for some, become synonymous with women’s health in general.) These companies – shortened to “women’s health” throughout this article – raised $1.14B collectively in 2023 across 120 deals. Both the amount of capital and number of deals declined from the previous highs of 2021: $1.31B collectively across 177 deals.
But, despite the challenging fundraising environment for all startups – women’s health ones included – that led to this decreased capital and deals, the average deal size for women’s health companies actually reached a new high: $10.4M. Put another way, although fewer women’s health companies raised funds in 2023 than in years past, those that did raise were managing, on average, to raise more capital – $886K collectively or 9.3% more than companies in 2022: the previous record-setting year for average deal size – per deal than their predecessors: a promising trend.
Alongside their increasing average deal size, women’s health companies have receiving an increasing percentage of the venture capital raised by generalist healthcare companies: those that don’t necessarily focus on women’s health exclusively. In 2023, women’s health companies received 4.3% of the total $26.5B in venture capital that was invested in companies labeled as “health” or “healthcare” in PitchBook Data. As small as this percentage seems, it is the largest percentage of total venture capital invested in generalist healthcare companies that women’s health companies have received in the past five years and represents a 59% increase from the prior year, after several years of near-stagnation.
These increases, as slow and small as they may be, do represent progress. They also may show that the trajectory of women’s health can be influenced, for the better, by various external factors, including government involvement and the rise of several women’s health unicorns – and the women leaders behind them.
2024 will be the first full calendar year that the White House Initiative on Women’s Health Research is in effect. But this Initiative isn’t the only recent government policy that encourages additional interest, investment, and innovation in women’s health. In mid-December 2023, just last month, the Menopause Research and Equity Act was introduced to Congress. If passed, this research bill would require the National Institutes of Health (NIH) to convene a multidisciplinary team of health professionals to evaluate current menopause research and to recommend new studies that could improve and advance knowledge around perimenopause, menopause, and women’s midlife health in general. As is, an estimated 6,000 U.S. women reach menopause daily (adding up to over two million women annually), and menopause symptoms cost them around $1.8B in lost working time per year.
In the House of Representatives, the other legislative branch, pro-choice Representatives are fighting first to bring the Women’s Health Protection Act to a vote and then to pass it. If passed, this Act would guarantee a patient’s ability to continue or to end a pregnancy and a healthcare provider’s ability to provide abortion services – without governmental restrictions. Pending a federal law, abortion rights have been in the hands of voters since the overturning of Roe v. Wade in 2022. In the seven states that have already voted on abortion, the right to an abortion has won in all seven. Meanwhile, two pregnancy- and abortion-related measures will definitely appear on ballots for the 2024 election and 14 others may be.
The overturning of Roe v. Wade and these other governmental actions, ballot issues, and policies illustrate renewed federal attention around women’s health. In the process, they also show women that they themselves must protect and prioritize their health, including voting for measures they believe do so and supporting the companies, investors, organizations, and politicians that share that mission.
Women’s Health Unicorns
This federal focus on women’s health, though, hasn’t always bolstered the valuation of women’s health companies. In fact, women’s health companies have been valued at a fifth less than generalist health companies, according to a report from Silicon Valley Bank. The report notes, “One reason for the lower valuations could be the lack of data collection on women’s health conditions. This is a roadblock when it comes to convincing investors there is a need, accurately estimating market size, receiving FDA approval, and getting reimbursement in unchartered waters.”
Convincing investors “there is a need” for women’s health innovations affects not only the valuations of these women’s health companies but also the amount of funding they receive in the first place. If potential investors don’t see “a need”, or if they see a women’s health company as a less valuable investment than a generalist health company, they may act accordingly; they may not invest in women’s health companies, and, subsequently, make it challenging for those companies to stay in business – much less grow, scale, and, ironically, show their value as an investment.
Lately, however, women’s health companies have been defying that cycle. Over the past few years, U.S-based, VC-backed women’s health companies such as Kindbody, Maven, and Tia have set records for some of the largest fundraising rounds for women’s health companies ever, raising $191.2M in May 2023, $110M in August 2021, and $100M in September 2021 respectively.
Women’s health unicorns, meanwhile, are no longer mythical creatures. Public companies Myovant Sciences (NAS: MYOV) and Progyny (NAS:PGNY) became unicorns in October 2017 and October 2019 respectively. Private, U.S-based companies Maven and Kindbody hit unicorn status in August 2021 and February 2022 respectively while private, U.K-based companies Let’s Get Checked and Flo saw their value hit over $1 billion in June 2021 and during 2023 respectively. Meanwhile, companies like Ro Health, Everly Health, and Thirty Madison – which do not focus solely on the health of women exclusively but do address health issues that women face, often disproportionately – are other notable unicorns as of July 2020, December 2020, and June 2021 respectively.
Women’s health thus entered 2024 with more unicorn companies than ever before. And, through their unicorn status, their large fundraising rounds, or both, these companies have proved that women’s health is not a niche business but rather an incredibly valuable one, due for increased investment.
In its title alone, a 2023 article laid out the challenge that female founders in women’s health face: “Even in FemTech, it Still Pays to Be a Male Founder”. The article notes that, “in 2022, 57 FemTech companies with all male-founding teams raised $731M collectively while 105 FemTech companies with all female founding teams raised $408M collectively.” Put another way, according to this article, male founders in FemTech had an average deal size of $13.3M while female founders’ was $3.9M.
Recent PitchBook Data shows that this disappointing trend may be changing, though; female founders and CEOs are still raising more capital across more deals than their male counterparts – but their average deal sizes are larger as well. In 2o23, the average deal size for female founders in women’s healthcare (which here – unlike in the 2023 article – includes but is not limited to only FemTech companies) was $13.1M and was $11.4M for female CEOs compared to $9.5M for male founders and $9.2M for male CEOs.
Just a year ago, in 2022, that data was reversed, with male founders and CEOs closing bigger deals on average than female leaders, even in the women’s healthcare space. The average deal size then was $24.1M for male founders and $18.9 for male CEOs in women’s health compared to $7.2M for female founders and $6.4M for female CEOs.
In addition to now closing larger average deals than male founders and CEOs, women’s health companies with female founders and CEOs set new fundraising records in general. Women’s health companies with female founders collectively raised $434.9M: an amount that is nearly $100M – or nearly 30% – higher than the previous record of $335.6M, which they collectively raised in 2021. Women’s health companies with a female CEO collectively raised $593.1M: almost $200M and almost 50% higher than the previous record of $39.26M, which was also set in 2021.
The number of deals completed by both female founders and female CEOs of women’s health companies have shrunk from 2022 to 2023: decreasing 10.8% for female founders and 11.9% for female CEOs. But the fact that the average deal size has increased for both of these groups is a potential symbol of hope both that female founders and CEOs can, and will, continue to persevere and succeed, despite historical fundraising biases, and that deal sizes may continue to increase.
These average deal sizes – as well as funding for women in women’s health and future funding for women’s health – may also have profited from the recent successes of female founders, CEOs, or both (in the cases of Everly Health, Kindbody, Maven, and Tia). Those accomplishments may help increase funding not just to women’s health but to the female founders and CEOs behind those companies, who have already proved that being a woman in women’s health can pay off: literally and figuratively.
Women’s health does not have any guarantees for 2024. But the increasing average deal size and percentage of total healthcare VC funding they receive – in addition to the federal attention on this space, its number of record-breaking fundraising rounds and unicorns, and the successes of women leading these companies – may propel women’s health forward and forecast permanent positive changes in this investment sector. 2024, as a result, may be a long-awaited and much-needed standout year for women’s health and for all its advocates, entrepreneurs and investors included.