Bikini Medicine No More a Joke With Investment in Women’s Health

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A pregnant woman holds a smart device displaying a screen from the Clue health app.

Photographer: Simon Dawson/Bloomberg
  • More venture capital flowing into health startups led by women
  • ‘I had to get past the locker-room jokes,’ Sprout founder says

More female entrepreneurs and investors are focusing on largely unmet medical needs: their own.

Women are the health-care industry’s biggest customers, due in part to their need for reproductive care, and make 80 percent of the health-care decisions for their families. Tired of having their conditions misunderstood or dismissed as “bikini medicine,” they are starting up and investing in female-focused companies, many of them in digital health, a market valued at $55 billion in 2014, according to KPMG.

“Obviously women have unique health experiences that men don’t,” says Halle Tecco, who was a co-founder of venture-capital fund Rock Health and is now an adjunct professor for digital health at Columbia Business School. “It is a huge market.”

And therein lies the rub: More than 90 percent of investing partners at the top 100 VC firms are men, research by startup-tracker CrunchBase shows. People invest in ideas that they feel comfortable with, and that’s why women are leading the charge on female health, says Albert Wenger, a partner at Union Square Ventures in New York.

“There is a bias that results from the fact that a lot of venture investors are male,” Wenger says. "We are five white guys who are exhibit A in the non-diverse case. It’s just the reality of it."

That’s changing, but slowly. Female health is attracting more investors of both sexes. Nine digital-health companies focused on women raised $82 million through the third quarter of last year, up from $29 million in 2014, according to Rock Health, whose board and investment team are mostly female. One of them, Progyny Inc., raised $34 million from investors including Kleiner Perkins Caufield & Byers and TPG Biotech.

That amount pales in comparison to the $4.5 billion that poured into digital-health companies overall. So women are once again trying to shrink the gap by investing in female-focused enterprises.

In April, Cindy Whitehead, who raised $100 million for Sprout Pharmaceuticals Inc. before it was bought by Valeant Pharmaceuticals International Inc. for $1 billion, started another company, The Pink Ceiling. It will make investments and do strategic consulting for companies working on women’s issues.

Sharing Stories

“It was an advantage for me to be a woman leading Sprout,” which made the first pill for low sexual desire, Whitehead says. “Women shared their stories with me. We did a year of diligence and just by listening I had such a better appreciation of the devastation for women."

Being a woman is less of a bonus when raising money for a women’s health business.

“I had to get past the locker-room jokes and giggles to get to a serious and frank scientific discussion” with potential investors, Whitehead says. She “adapted by understanding how fiercely I needed to come out of the gate with science.”

Wenger’s Union Square, an early backer of Twitter Inc., saw a clear need for Berlin-based Clue, which helps women track their menstrual and fertility cycles. Wenger says the business case was strong: More women are going to have easy access to a smartphone than to birth control, and that creates an opportunity to educate women about their bodies and contraceptives.

Biological Experience

That pitch didn’t appeal to everyone, says Clue founder Ida Tin, whose company has raised $10 million and has 5 million users.

“One thing is understanding something intellectually, another thing is having that experience which is anchored in your body emotionally,” Tin says. “Sometimes people would say, ‘You know it’s really interesting but I can’t use the product myself. I only invest in products that I can use myself.’ And that’s of course the problem if all are male investors.”

The solution? More female investors. Tecco has invested in EverlyWell, a direct-to-consumer at-home testing business, and recently joined the advisory board at startup Celmatix, which uses data analysis and genomics to improve woman’s chances of conceiving. Both companies are led by women.

‘Huge Opportunity’

With women becoming more financially independent, and living longer than men on average, “this a huge business opportunity," says Anula Jayasuriya, a doctor who oversees a women’s health-care entrepreneurship and investment fund, EXXclaim Capital. She has invested in Wildflower Health, whose Grow application enables women to track the health of their families and tap into resources provided by a health plan or other sponsor.

The proportion of VC deals involving companies founded by women has doubled since 2006, yet is still only 18 percent, according to data from Pitchbook, which tracks private equity, venture capital and merger and acquisition activity.

Besides a lack of female mentors and investors, Whitehead thinks women’s health suffers because issues are often assumed to be psychological.

"We have a lot of preconceived notions where we reflexively assign issues to biology for men, and to psychology for women,” she says. “We’re under-serving men that way, too."

Tracking Hormones

Hormones are a key marker of disease that are consistently overlooked by medical professionals, says Heather Bowerman, who started Dot Laboratories in 2014. The company makes hormone test kits that rely on saliva samples, which can be sent through the mail to a lab. Users track the results over time using a mobile app. 

Having that data at their fingertips can help patients choose the right contraceptive, as well as treatments for disorders such as polycystic ovary syndrome or PCOS, a market that’s set to double to $10 billion by 2020, Dot Labs says.

Research is revealing the breadth of the differences between the sexes, with genes, hormones and gender roles influencing the course of conditions such as heart disease, dementia and depression.

With more women involved in the health business, the foundation is there to capitalize on such discoveries.

“The wheels have been set in motion now for a very, very positive development in terms of increases in female investors, female entrepreneurs, female-founded business that will build long-term success," Wenger says.

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