Flint Capital partner reveals five steps to funding success for AgeTech startups.
By 2030, 1 in 6 people in the world will be aged 60 or over. The quality of life of the elder population is now in the spotlight more than ever, due to the prolonged isolation and health risks related to the COVID-19 pandemic. How does the tech industry respond, and which AgeTech startups does the economy need in the long run?
Longevity.Technology: To answer these questions, we asked Flint Capital’s Sergey Gribov for his perspective. Flint is an international VC fund that invests across Europe, Israel, and the U.S. with a portfolio of 45 companies including healthtech startups Flo Health, Antidote Health, XRHealth, and agetech startup Sensi.AI. With deep expertise in the healthtech and AgeTech markets, Gribov is a board member and advisor at XRHealth and Sensi.AI.
The world is yet to comprehend the full impact of the pandemic on people’s lives – and on the aging population in particular – but researchers already anticipate a number of negative outcomes. Apart from the complications of the disease itself for those who experienced it, the elderly will have to deal with less personal interactions, difficulties accessing regular services and medical help, and reduction of physical activity that can severely diminish quality of life.
Meanwhile in the next 10 years, the 60+ population will increase from 1 billion in 2020 to 1.4 billion. In the U.S., the elderly will account for half of GDP by 2032 and outnumber children by 2034. Purely from a tech business perspective, we see it as a $37 trillion longevity economy representing the sum of all economic activity for the needs of older adults. This economy has a consistently growing consumer base and a set of needs accelerated by the pandemic, while being significantly underserved by AgeTech startups and VCs alike.
Why is there a gap between supply and demand? The AgeTech market is conservative and fragmented, with each segment dominated by niche companies, which are slow in adopting innovation. Hence, the entrepreneurs who try to launch a startup in this field are often steered away by the go-to-market complications. However, those who decide to grow an AgeTech business in 2022 stand a good chance to benefit from a lucrative segment ripe for the picking – and here is why.
The rise of AgeTech
The aging population is increasingly active, healthy and has money to spend. A total volume of purchased goods and services of Americans aged 50+ is projected to increase from $7.6 trillion in 2018 to $27.5 trillion by 2050.
Most importantly, target consumers of the segment are expected to spend big on tech solutions – $200 billion by 2030 – that will improve the longevity and quality of their lives. According to a recent study, older adults are increasingly adopting technologies (smartphones, tablets, wearables, etc.) and ecommerce shopping.
Preemptively addressing the needs of this rapidly growing share of digital customers, AgeTech solutions are well positioned to take the lead in the longevity economy. We expect that the companies starting in the segment now will be ready to scale within two to three years. And in a five-year timeframe, we will see several new AgeTech unicorns which are going to be created in the next 12 months.
Compared to the more generic health tech, less VCs are playing in the AgeTech segment. Nevertheless, the AgeTech market, which is expected to reach $2 trillion globally, is definitely on the investors’ radar.
Over the past five years, VCs have poured over $2.5 billion into the segment in the US alone, with nearly half of investments made in 2020. In the first half of 2021, U.S. startups focused on eldercare and home healthcare received another $500M in venture capital, according to Crunchbase.
Moreover, on the AgeTech market map, 45 companies raised hundreds of millions of dollars in 2020. This is in line with an overall VC trend for the bigger funding rounds, caused by the increase in liquidity due to the pandemic.
To keep the momentum and support further growth, AgeTech startups will need to leverage the learnings from both the existing players, but also from the other conservative industries that experienced a major disruption in the recent years, such as healthcare or logistics.
Five steps to get funded
In order to succeed in facilitating innovation for the aging population, the founders of AgeTech startups need to prioritise their efforts.
Find a niche
Broadly, the AgeTech market has a few sub-segments, with the largest ones being:
- Health and medication (XR Heatlh, EchoCare, AdhereTech)
- Senior living support (Roobrik, Welbi)
- Wellness (Livindi, UnaliWear, SafelyYou)
- Independence (NaborForce, Audicus, Retirable)
- Solutions for home care providers (Sensi.AI, Birdie, Vesta)
Those types of solutions help elders fulfill the primary needs and find quality care, from triggering alarms to providing everyday assistance, and create a tech backbone for the longevity economy. While these segments are expected to mature and consolidate in 2022, none of them has a clear established leader yet.
Understand the core needs
The most urgent need to be addressed by AgeTech is an expected caregiver shortage – according to AARP Public Policy Institute, the number of potential family caregivers for every person aged 80+ is expected to drop from 7.1 in 2010 to 4.1 in 2030. At the same time, most seniors prefer to age at home, which requires accessible care services, safety and prolonged independence. Technology innovations can help elders stay within the comfort of their homes with less reliance on personal caregivers.
Looking broader, as the digital-first customers grow older, they would want to keep the same level of digital presence, but with the services that are most relevant to their new lifestyle. We already see some initiatives, such as the joint project by GreatCall and Lyft in the US, which allow older customers to order transportation by phone with one click of a button.
Cater for the preferences
However, for seniors willing to adapt new technologies, AgeTech doesn’t only have to be about bigger buttons or louder audio. The next generation of the industry-defining AgeTech solutions will be not only the ones that older adults need – but rather what they want. VCs are in consensus that the most promising strategy in the segment looks like targeting older adults with money to spend for themselves.
Hence, we expect high growth rates in segments, which prioritise not only elders’ primary needs, but also solutions for a fuller and happier life. For example, providing robotic companions (Tombot), tackling isolation (Papa), dating (OurTime) or retirement planning (Retirable), are all examples of services going beyond the bare minimum of what seniors have been thought to traditionally require.
Overall, across both core and additional needs, The White House Office of Science & Technology defines five functional areas where technology can make a positive change for the elders:
- Access to healthcare, including telemedicine, healthy lifestyle and wellness.
- Cognition, including learning and training, supporting cognitive health, financial wellness and security, as well as employment.
- Independence, including autonomous mobility, medication, hygiene, nutrition and monitoring vitals.
- Communication, including hearing and vision support, staying connected, as well as socialising in the communities.
- Transportation, including both self-driving and public transport.
Consider all stakeholders
Taking this one-step further, AgeTech solutions do not have to focus just on the needs and requirements of the seniors. A whole caregiver circle – family, public authorities, healthcare, service providers – need to be considered as crucial stakeholders, as it is in their remit to order tech solutions to improve the quality of life for the aging population.
Additionally, AgeTech startups can preemptively target adults in their 30s-40s. The research shows that millennials and Gen-Z are starting to take care of their life plans after retirement much earlier than their parents, hence are evaluating the technology options. Understanding the technology usage patterns of the younger adults can also help to future proof the solutions for the long run.
Advance the AgeTech
When it comes to technologies, voice-dependent user interfaces, robotics, and VR/AR lead the path in the AgeTech segment. For example, services like Lifepod use a virtual assistant to keep seniors engaged and safe at home.
VCs will expect a funding-worthy AgeTech solution to address the connectivity limitations, be accessible for various levels of digital literacy and easy to set up on a range of devices, as well as to be cost-effective – both for the public and private sector.
Finally, integrating use cases, which are most relevant for the older digital customers, with state-of-the-art tech and design/UX process centred around their habits and needs will create a winning combination for AgeTech startups in 2022.
Disclaimer: Flint Capital’s portfolio includes Sensi.ai & XRhealth.