Female Founders Are Energizing Investment In Women’s Healthcare: Expect More In 2023

Despite women making up more than 50% of the population and sex-based differences influencing all tissues, organs, and bodily functions, little attention has been made to the prevention, diagnoses, and treatment of women's unique health needs, according to McKinsey. About 1% of healthcare research and innovation is invested in female-specific conditions beyond oncology.

While venture capital for female founders addressing healthcare needs has increased, it's a drop in the overall healthcare bucket.

It's not just sex-specific diseases and conditions, from periods to childbirth to menopause, but those that affect men and women differently, including cardiovascular, migraines, and autoimmune disorders.

Even small increases in investment would deliver high return on investment (ROI) and better health outcomes for women, writes Chloe E. Bird a sociologist who studies health equity for RAND Corporation. Female founders are showing the potential for significant ROI for investors including—Maven Clinic— which achieved unicorn status. More is needed.

Springboard Enterprises is doubling down on its support of women-led healthcare companies. Springboard is well-equipped to impact the sector. Over 5,000 advisors, investors, successful entrepreneurs, and business and industry leaders provide expertise, from crafting an investor pitch to commercialization of innovations to protecting IP.

Over the course of its 22 years, 880 plus women-led companies have been served, 90% raised capital, 27 have gone public with an initial public offering (IPO), $36 billion in value was created, 225 plus mergers-and-acquisitions transactions were made, and 10 achieved unicorn status. Many of these companies are focused on women's healthcare, including AOA Dx, Aspira Women's Health, LunaJoy, Mahmee, Materna Medical, and Rosy Wellness.

Springboard provides congressional testimony about the inequities in entrepreneurship, the underfunding of research, and the underinvestment of women-led healthcare companies and their impact on women's health outcomes.

Men need to recognize that women's healthcare is a market ripe for disruption and innovation. Walk into male investors' offices talking about pelvic floor and menopause solutions and they don't have a personal point of reference to understand the problem, commented Natalie Buford-Young, CEO at Springboard. Having the perspectives of their wives, daughters, mothers, sisters, friends, or colleagues isn't the same as lived experience. Female founders and VCs are showing where the opportunities are.

In May 2020, Springboard launched the Women's Health Innovation Coalition to drive innovation, investment, and research for women's health solutions. It created a coalition to bring investors, researchers, policymakers, and entrepreneurs together on gender-specific health, such as gynecological and reproductive health, sexual health, and conditions that women are more likely to have or that manifest differently in women than men, such as oncology, bone health, heart disease, and cognitive and brain health conditions.

"We're seeing an increase in the number of Big Pharma and other large companies that want to have eyes on the next generation of companies in women's health," said Buford-Young. "They want to identify early-stage innovative companies efficiently, and that's where we come in. These organizations serve as advisors, provide research assistance, and provide grants or corporate venture capital."

Springboard will be launching cohorts that are specifically focused on women's health.

At its gala last October, Springboard named Portfolia as its investor of the year. Portfolia is the most active investor in the U.S. in women's health, with over 40 investments, from seed to pre-IPO, including Bone Health Technologies, JOYLUX, Maven Clinic, Everly Health, and Willow Breast Pump.

When Portfolia formed its first fund in 2016, it wasn't dedicated to women's health but still invested in the sector. "We realized what a huge untapped market there was," declared Trish Costello, founder and CEO of the venture capital firm.

"The sector was ignoring women," exclaimed Costello. In 2018, Portfolia launched its first femtech fund. It will be launching its third fund this year, and it's up to its second fund in the active aging and longevity space. Its other funds also make investments in women's healthcare.

"[Because men don't understand women's healthcare] it's critical to have women writing checks," said Costello. While the number is growing, only 16.1% of VC decision-makers are women, according to 2022 All In: Female Founders in US VC Ecosystem.

VCs are not funding founders, products, and solutions addressing women's healthcare needs. Adding one or two women to the venture firm's team does not quickly change the ratio. To scale change, Costello is activating accredited female investors to become limited partners (LPs) by writing checks into Portfolia funds: 88% of its 1,800 members are women. Nearly all—95%—are first-time investors.

Costello could have focused on raising money from a few large institutional investors. "But that wouldn't shift how women saw their ability to be powerful in the space," she said.

Only a tiny percentage of accredited investors invest in venture capital. There's a perception that it is for the ultra-rich. However, to qualify to be an accredited investor, you need is to:

• Earn $200,000 per year: About 22% of the people who earn $200,00+ are women. Or,
• Have a million dollars in assets: 33% of millionaires are women.

By law, only funds that are $10 million or less can have more than 99 accredited investors. To achieve a fund size of more than $10 million, you need LPs who can write checks for hundreds of thousands of dollars, if not millions. Hence the perception that investing in venture is for the ultra-rich.

Funds that are $10 million or less can have 249 accredited investors. How Women (and Men) Invest in Startups* recommends changing the policy to increase the number of accredited investors to 499 and the fund value to $50 million. Nearly three-quarters of accredited female investors would invest in venture capital if they could write a check for as little as $25,000. Among those who wouldn't invest $25,000, 39% would invest $10,000. First-time investors can invest in Portfolia for as little as $10,000.

In 2006, VCs invested only $143 million in women's healthcare, according to PitchBook. That number had grown to $1.9 billion by 2022. In 2006, only 4% of venture dollars went to companies with at least one woman decision maker. That percentage had grown to 85% in 2022. Female founders are driving growth in the sector.

With the overturning of Roe v. Wade, expect women to be even more energized to protect and improve women's health. Whether founders or investors, women recognize the negative impact on healthcare outcomes that the decision will generate. This concern may be why funding of female-founded women's healthcare companies was less impacted by the VC downturn than exclusively male-founded women's healthcare companies.

Investment in women's healthcare companies with at least one female founder were down 22% from 2021 to 2202, while male-founded companies were down 68%.

Whether it is women writing checks as VCs or LPs, they are making their mark.

Which industries are you discovering that are ripe for innovation?