ICYMI: Flo Health – currently the top most downloaded women’s health app worldwide (with over 20 million active users) – announced that it has raised over $200M from investors. Along with this fresh capital injection to plough into the company’s growth, the company has also been valued at over $1 billion, hitting “unicorn” status in the tech world. Not interested in anything to do with investing/finance? Well, bear with us – because this announcement has sparked quite the conversation, and here’s why.
Despite women’s health being the core of Flo (an app that has an ovulation calendar, period tracker, and pregnancy app), Flo was started in 2015 by two brothers from Belarus: Dmitry and Yuri Gurski.
Now, Flo Health wants the public to focus less on their male co-founding team, and more on the fact that the product is a team effort, and to see this capital raise as a positive “signal” for the future of other women’s health tech companies.
But some female founders and investors don’t see this as the full story, particularly in a climate where women entrepreneurs consistently raise less capital than their male counterparts – and only receive 2-4 per cent of total VC funding.
And in femtech specifically – a world where you’d think the views of women would be pretty important – over the past five years, male femtech founders have raised more money annually than their female counterparts, even though over 70% of femtech companies are founded by women.
Female founders react
For Ovum founder Dr Ariella Heffernan-Marks, she’s struggling to get her head around this news.
“On the one hand at least the economic benefit of FemTech is being recognised. It is clearly investible! (But, it isn’t like women haven’t been saying that for decades now or anything). I hope this means I no longer have to defend the commercial benefits of improving women’s health for our entire global economy when this disparity in women’s healthcare, means that currently over half the population are limited from contributing to the economy during their most productive years,” she wrote in a post on LinkedIn.
“But on the other hand, it is disappointing that out of all the incredible FemTech companies that exist, which are founded by brilliant women founders – that the one that gets the biggest valuation and investment is the one founded by two men.”
“What angered me the most, was I saw comments from men such as ‘maybe they just had a really good pitch..’, – how about as commercially minded as these founders may be – they will never have as good domain expertise as a woman, when it comes to managing reproductive health, and the barriers that women experience every day in the health-care system.
“If this doesn’t highlight the gender bias in the investment landscape, I do not know what does.”
A LinkedIn post from Anna-Sophia Hartvigsen, co-founder of Female Invest, which is backed by Y-Combinator, also blew up.
“Yesterday, a company founded by men, led by men and funded by men became the first WOMEN’S health app to achieve unicorn status. If this doesn’t show you everything that’s wrong with the ecosystem, I don’t know what will. Let me explain,” Hartvigsen wrote. “Raising money as a female founder is close to impossible, with just 2% of funding going to women (even though they on average deliver a higher return per invested dollar). Why? Because women are discriminated at every step of the process. Please remember. This is not an opinion, it’s a fact. An overwhelming amount of research on the topic has been done – all showing the same trends.”
The Flo Health perspective
In response to the criticism, a spokesperson for Flo Health said: “We firmly believe that women’s health has been critically overlooked, undervalued, and underfunded for far too long. This is evidenced by the fact that in 2023, less than 25% of all deals went to female-founded companies [in the US], and as of today, femtech companies receive only 3% of digital health funding. Our sincere hope is that Flo’s most recent funding will inspire more investors to recognise the immense potential in this space”.
In an interview in March last year, Dmitry explained that him and his brother had actually attempted to scale startups in the women’s health space prior to Flo. “11 years ago, I fully committed myself to the app market. Flo was technically our third – and most successful – attempt at building a women’s health app. Success is the sum of your attempts. By the time we launched Flo, we’d accumulated a lot of knowledge, which allowed us to build an app that proved to be not only viable but also highly successful.”
He was also asked how the experience has been as a male founder of a FemTech startup named as a pioneer of women’s health issues, Dmitry noted that being a male founder is “less relevant” in this instance – and also acknowledges their lack of personal experience with the actual issue they are solving through their company. “We rely on our users’ feedback and metrics to inform our decisions, as opposed to mine or even the team’s. In a way, it’s also what contributed to our success,” he said.
“We didn’t have any personal experience and had to rely on testing and in-depth studies from the very beginning. We’ve always used objective information, data, user research, and tests to make decisions. At this stage, it’s not my product, but rather a collective effort of the whole company. I have very little say in what goes into the product, my job is to build the company that in turn builds the product.”
The investor take
Scale Investors managing partners Samar McHeileh, who co-runs a fund from Melbourne that only backs women-led teams, having lived experience isn’t essential, but it helps founders go the distance.
“Many early stage investors recognise the value of founder’s with lived experience and their unique perspective to the problem they are solving. Being a founder is a long non-linear journey, you need the grit and determination to see it through,” she says.
“Lived experience of pain points is a fundamental reason why we believe women-led teams are best placed to solve problems experienced by women and why they will go the distance. The question, surely, is how are founders with no lived experience surrounding themselves with the expertise needed?”