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As more VC money floods into fertility, some startups are feeling left out

More startups are cropping up to tackle infertility, but not all are getting the same level of investor interest, particularly when it comes to diagnostics and alternative treatments.

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Fertility-focused tech is attracting an unprecedented amount of venture capital funding, but startups developing new reproductive treatments and diagnostic tools still feel overlooked.

Infertility is a massive issue that affects 15% of reproductive-aged couples worldwide, according to the World Health Organization. Studies show that the use of procedures like in vitro fertilization—where eggs and sperm are combined in a lab—have increased dramatically.

The problem is not new, but only in the past couple of years have VCs really turned their attention to startups that are working to address the issue. Last year, $823.1 million was invested across 90 deals globally, according to PitchBook data—an increase of 273.3% and 109.3%, respectively, over five years.

 

“The conversation around reproductive health has improved in recent years,” Atomico partner Sasha Astafyeva said. “Societal changes like people starting families later has made it more socially acceptable to talk about infertility issues and challenges that people face.”

More startups are cropping up to tackle infertility, but not all are getting the same level of investor interest, particularly when it comes to diagnostics and alternative treatments.

This is the case for EndoGene.Bio, a Paris-based startup developing a test to diagnose endometriosis, a condition where tissue similar to the lining of a woman’s womb starts to grow in other places, potentially causing infertility. The company is currently fundraising, and co-founder María Teresa Pérez Zaballos has faced hurdles when it comes to VCs.

“We’ve been called taboo tech, femtech, or told the market isn’t big enough,” Pérez Zaballos said. "[Investments] in general are on the rise, but I feel that people are looking for quick and easy solutions; no one wants to take the risk. Infertility is still a very reactive field and we need more focus on prevention to solve it.”

Much of the capital invested in fertility is dedicated to reactive and well-known medical tech like egg-freezing and IVF improvements, according to Octopus Ventures investor Matthieu Vallin. Part of the problem is that conversations around fertility often begin too late, when people are already planning to have a child. This puts more emphasis on reactive treatment.

IVF has existed for decades and has a proven success rate for live births—around 55% for women under 35, according to the Society for Assisted Reproductive Technology. Backing startups that offer access to IVF or improve its efficiency by optimizing embryo selection or sperm count is less risky than investing in early-stage companies developing tech that hasn’t been as proven.

“We need to start looking beyond IVF,” Vallin said. “A lot of people concentrate on fertility hotspots, and investments in pre-clinical and at-home diagnostics are falling behind. By focusing on [the latter], people can get treated earlier and we can improve success rates without having to spend $15,000 per cycle.”

Backing a medical startup in any field is risky. And, unlike an app or a financial product, fertility startups face a larger regulatory burden and require a larger investment of both time and capital. A startup may take a decade to bring a product to market, which could be a deterrence to investors.

Tess Cosad, co-founder of Béa Fertility, which is building an at-home intracervical insemination kit, found this to be a challenge with investors.

“Investors were very open to what we’re doing, but it’s easier when it’s an organization that’s about financial services [rather] than regulated medical devices that have clinical experiences,” Cosad said. “I think the low-hanging fruit in terms of the VC market is going to be the areas of the industry where you can spin up a business without needing to go and get yourself regulated.”

According to Astafyeva, it’s less about the risk and more about addressing the most pressing pain points along the fertility journey.

Access is a major challenge for people struggling to conceive. Fertility is inconsistently legislated across the world and within countries themselves. Even in some countries with public healthcare systems, infertility is often underfunded because it isn’t considered a “life or death” situation.

This has led to high privatization and prohibitive costs for most. For example, a single cycle of IVF treatment can cost between £5,000 and £10,000 (about $6,271 to $12,542) in the UK, or up to $60,000 in the US, according to Octopus Ventures, with no guarantee of a successful outcome.

Although new preventative technologies and treatments may bring down costs in the long run, there is an immediate need to provide access to fertility care. More VCs are turning their attention to the space with investments in startups like UK-based Gaia, which offers a fertility insurance product using outcome-based pricing, and Carrot, which offers fertility benefits for employers.

“When I think about the startups with the ability to have the most immediate impact and to change the paradigm for so many people, it starts with access,” Astafyeva said. “We should be innovating across the spectrum, but right now a lot of people are being shut out from treatments. Addressing that problem to me is a tremendous opportunity.”

Featured image by Hector Roqueta Rivero/Getty Images

  • leah-hodgson-photo.jpg
    Written by Leah Hodgson
    Leah Hodgson is a London-based senior reporter for PitchBook covering venture capital across Europe and the Middle East. Leah graduated from the University of Surrey with a BA in international politics with French. She has previously been a radio reporter in France. She later turned to financial journalism, covering the wealth management industry. She joined PitchBook in 2018.
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