Fertility and other female health technology start-ups have attracted billions from investors seeking to tap a $36bn market of women from puberty to menopause, but privacy fears risk curbing growth.
Venture capitalists poured almost $4.9bn into femtech, the software and services targeting women’s health, in the three years to March, backing start-ups such as menstrual cycle and ovulation trackers Flo and Stardust. That figure, from March 2021 to 2024, shows a jump of about two-thirds compared with the previous three-year period, according to private markets data provider PitchBook.
“The good news and the bad news in women’s health is that there are so many underserved areas,” said Elizabeth Bailey, co-founder of venture capital fund RH Capital. “Pretty much everywhere you look in women’s health there has been under-investment and under-innovation so there are huge opportunities.”
However, Bailey pointed to a lack of transparency on data privacy as a prime reason for investors to shun some of the latest femtech start-ups.
The US Supreme Court’s ruling in June 2022 to overturn women’s constitutional right to abortion catapulted privacy concerns in the industry to centre stage. In the UK, meanwhile, about a third of women use the apps to track their menstrual cycles or fertility, according to a specially commissioned poll from Savanta, published in September. More than half worried about data transparency and security.
“We previously took a pretty general approach to privacy protection but [since 2022] we are not interested in investing in companies that sell their data to anyone else,” Bailey said. “That’s the bright, red line for us.”
Some researchers warn that a number of the products that track symptoms, aid family planning and detect early signs of health issues may be putting their millions of users at risk through misleading and unclear data policies, in a sector Dealroom.co estimates is worth about $36bn.
“There seems to be a one-size-fits-all approach that doesn’t factor in the specific concerns of the people using these intimate apps,” said Ruba Abu-Salma, a lecturer in computer science at King’s College London.
Abu-Salma’s research, published in May, found “problematic practices” and “inconsistencies” on data privacy in several of the most popular period-tracking and fertility apps on the UK and US Google Play stores.
Those included policies that could enable intimate user data to be accessed by law enforcement in countries or US states where abortion is prohibited.
Her team, which included researchers from University College London, said data on users’ behaviour, such as clickpaths — the way users navigate the app — and internal searches often receives less protection than intimate personal details entered directly into the app.
This behavioural data is as important to shield since the information could “be enough to infer that you had a miscarriage or abortion — perhaps incorrectly”, Abu-Salma said.
A push via social media following the reversal of Roe vs Wade two years ago crimped the use of some of these products as women were urged to delete period-tracking and fertility apps from their phones over fears personal data could be used to incriminate pregnant women seeking to have an abortion.
Active user numbers on Flo and Clue, two of the world’s largest cycle tracker products by user base, dipped immediately after those campaigns went viral, according to figures from market intelligence provider Sensor Tower.
Users, meanwhile, flocked to smaller rival Stardust, which branded itself as a privacy-first product, more than quadrupling downloads from May to June 2022. However, the app was unable to keep up the momentum and its growth has slowed.
The reversal of Roe vs Wade prompted many industry start-ups to beef up their privacy credentials as they seek new funding and subscribers.
For example, Clue’s marketing emphasises that the company is headquartered in Germany and is subject to EU privacy regulations. The company last year launched billboards in the US with slogans such as: “What’s the super long German word for ‘privacy-based period tracking app that won’t give your data to the US authorities? Clue’.”
Flo, which highlights that it is UK-based and subject to the EU’s General Data Protection Regulation on information privacy, has a free “anonymous mode” that allows people to use the app without linking intimate data to their name. Sue Khan, vice-president for privacy, said Flo accelerated the launch of that feature to September 2022 in response to the Supreme Court’s ruling.
“Our awareness of the privacy impact to individuals when engaging with health tech naturally increased” after the US decision, said Khan. “We strongly believe that women deserve to track their body signals, access medically credible information, and gain personalised insights without concerns about their rights to privacy or the security of their information.”
Flo’s recognition of the need to protect its users’ data, however, came after a public reprimand. In 2021 Flo agreed to changes and updates following an investigation from the US Federal Trade Commission over allegations it shared data on users’ menstrual cycles and pregnancies with analytics teams at third-party companies, including Google and Facebook.
Some investors fear growing privacy concerns have made it harder to profit from these products. Targeted advertising, a common tool for apps to make money, has become controversial in the sector over fears that intimate data would be shared with third-party marketing groups.
Many apps, including Clue and Flo, now operate on “freemium” models, in which users can access a basic version of the app for free but must pay for extras.
Many premium features focus on pregnancy advice and conception analytics, rather than standard cycle-tracking, because “people are willing to pay when it comes to fertility”, said Bethany Corbin, co-founder of industry consultancy FemInnovation.
Flo last year generated revenues of more than $140mn, a 40 per cent increase from 2022, driven by the 3.4mn paying subscribers to Flo Premium. Prices vary but in the UK a monthly subscription costs £4.99.
Clue declined to disclose revenues but said it had more than 500,000 subscribers to Clue Plus, its premium product. Audrey Tsang, its chief executive, remains optimistic that the subscription model is sufficient to make the company profitable, especially after cuts that included laying off a quarter of its 100 employees at the beginning of 2023.
“We build things that are so useful and valuable that people are going to pay for it,” said Tsang.