The UK femtech controversy explained

It reads like something out of Brass Eye. In July, period tracking app Flo Health became the first women’s health app to achieve unicorn status. The news was a major milestone for the growing ‘femtech’ industry — and another day at the office for male-owned startups.

“Reaching unicorn status is a significant milestone for Flo and the entire femtech industry,” said co-founder Dmitry Gurski, who launched the app with his brother, Yuri Gurski in 2016.

The irony that the first femtech unicorn has been, as one female entrepreneur wrote, “founded by men, led by men and funded by men” was not lost on LinkedIn members. Many took to the site to lament the lack of funding for women founders; a trend that has persisted for decades.

Since then, the social media debate has blossomed into a larger online movement, as women question why men are leading female product innovation. Here’s how the health industry’s “next big phenomenon” has become its biggest controversy today.

What is femtech?

The term femtech was first coined in 2016 by Danish entrepreneur, Ida Tin. It commonly refers to software that services women’s health issues such as menstruation, pregnancy, and menopause.

However, Tin, who is the CEO of period tracking app Clue, has since said that the term should cover “all things where women are impacted very differently from men or non-proportionally are affected, like brain health or bone health”.

As it’s a relatively new area, many burgeoning startups are still operating in stealth mode or in pre-seed. But big femtech names are on the cusp of becoming mainstream. Companies like Daye, which has developed a diagnostic tampon, or Jude, a bladder health startup.

Due largely to the tireless work of these women founders, healthcare experts have begun to take notice of what has been a previously ignored space.

Targeting an audience of 49.72% of the population, there is certainly a market opportunity. Experts forecast that femtech could be worth $50bn by 2030. But, while a woman might have christened the femtech sector, investors are positioning male founders to lead it.

Taking the ‘fem’ out of femtech

Perhaps one reason why Flo Health’s $200m Series C funding round sparked notice was due to it being an unusually high fundraise for the industry. In July, UK Tech News reported there were only 15 venture capital-backed femtech startups.

Alongside Flo, some of the best known are Elvie, which develops women’s health products, and Thyia, an at-home cervical screening company. Can you guess the link? Like Flo Health, both of these startups have a male founder on the board.

Investors, it seems, are increasingly turning to male-led businesses for female-focused solutions. And the problem has been brewing for some time.

Sifted data shows that in 2023, 57 femtech companies with all-male founding teams raised $731m, while 105 with all female founding teams shared just $408m.

Having a woman founder can actually be detrimental to raising money, as research shows that a femtech is less likely to get funding if it has a woman in its leadership team.

The findings mirror the huge venture capital deficit that women entrepreneurs experience more broadly across business. Just 2% of all VC funding goes to all-female startups and 26% to mixed-gender startups, leaving the remaining 72% to all-male startup teams.

Even women-focused grants are underdelivering. In September, Innovate UK was forced to apologise after it awarded just half of the 50 promised Women in Innovation awards, each worth £75,000 to female founders, in what it dismissed as a budgeting mistake.

“Everything that’s wrong with the ecosystem”

Flo Health’s founders agree there is an issue. In response to the comments, a spokesperson for Flo Health said: “We firmly believe that women’s health has been critically overlooked, undervalued, and underfunded for far too long.

“Our sincere hope is that Flo’s most recent funding will inspire more investors to recognise the immense potential in this space”.

Such well-meaning comments will do little to placate women entrepreneurs, however. It was hoped — perhaps expected — that the femtech space would provide a level playing field for women entrepreneurs. For some, Flo’s funding has dashed those hopes.

Sharing the news on LinkedIn, Anna-Sophie Hartvigsen, co-founder of Female Invest, wrote: “If this doesn’t show you everything that’s wrong with the ecosystem, I don’t know what will.”

Pinky promise?

The upset stems not just from gender funding inequalities, but also concern about the direction of movement that the femtech sector is going in.

One LinkedIn user expressed doubts that “a women’s health app founded and primarily led by men” can be “in sync with the interests, preferences and rights of those who menstruate”.

Flo Health previously faced criticism for its messaging when it rolled out a new product for male users, called Flo for Partners. ‘What if he knew when your period was due?’ read the caption, which the same LinkedIn commenter described as “sickening”.

Knowing your audience is key to starting a business. Just look at Pinky Gloves. The German startup made single-use pink plastic gloves for women to dispose of period products.

Perhaps no women were nearby to tell the founders how zero in demand their product was. Still, Pinky Gloves managed to raise €30,000 on Shark Tank, the German version of Dragon’s Den, from the (predictably) male investor, Ralf Dümmel.

So long as VCs continue to rain cash on male founders, there is a danger that female founders who are addressing important health issues will be overlooked in favour of the next Pinky Gloves.