Is the Mena region ready for femtech?
Amid the boom in healthtech over this past year, there is one sector that is now experiencing greater interest - femtech. This sector focuses solely on women’s health, from fertility and period-tracking apps to pregnancy care and sexual wellness. Several female-focused, tech-enabled startups have emerged in the Middle East and North Africa (Mena) region, keen to provide women with products and services related to their health. But while interest has been gathering pace, there is still a large gap in terms of financing allocated to femtech startups.
Globally, the femtech market is set to be worth $50 billion by 2025 according to research firm Frost & Sullivan which calls femtech the “next big phenomenon” in the women’s health market. Last year $1.3 billion was invested in this space, a substantial amount at first glance, but a pithy one when compared to the $300 billion invested by venture capital firms in startups overall.
Regionally, investment in healthtech grew by 280 per cent in 2020 to $72 million, but none of this was directed at femtech startups and instead, it was Okadoc and Vezeeta that received the bulk of this investment.
“The region is not used to the term femtech,” says Faris Mesmar, co-founder and CEO of UAE-based venture builder Hatch & Boost, which recently launched My Lily Box, a subscriptions service offering sanitary pads. Given the vast majority of investors in the region are men, the lack of understanding of women’s healthcare makes them hesitant to invest.
Moreover, the majority of femtech startups are founded and headed by women, who receive less funding than their male counterparts.
“We have to admit that the Mena region hasn’t been treating women founders with the same enthusiasm as other regions or countries that have been encouraging and supporting women entrepreneurship,” says Mesmar.
One startup that has slowly been breaking down the barriers is UAE-based Nabta health, a platform that provides health insights and diagnostic services on issues surrounding fertility, conception, and overall health. The company is planning to expand to Saudi Arabia and is targeting a Series A round later this year.
“We were told several times by investors and people that you won't find the support and the interest here to invest and build a women healthtech company,” says Sophie Smith, co-founder and CEO of Nabta Health. “We said there’s definitely a need, there’s definitely a demand, and there’s a gap in the market. Ultimately, the investor will preposition those who fill gaps in the market.”
Part of the problem is low cultural transparency and interest in issues regarding female health. Throughout the world, men are typically seen as the default, with clinical trials relying mostly on male volunteers. Research focusing solely on women’s health issues also receive less funding, despite women accounting for half of the world's population. This results in a skewed and limited understanding of female health in the medical world.
“There is a huge gap in the market in terms of women’s healthcare in general, but also in terms of women’s healthcare that is focused on Middle Eastern, African, and South Asian populations. They are still largely excluded from clinical trials,” says Smith, who points out that one of Nabta’s main aims for this year is “to get people talking about women’s healthtech here, make it a priority, to have us think about what it actually means to offer the best healthcare to women around the world”.
One area where femtech and health startups more broadly face challenges, is in the stringent regulatory requirements, given the sensitive nature of the sector, but one segment that can circumvent this is personal hygiene. Several startups have emerged in the region providing monthly subscription services for sanitary pads and other period-related products. This is perhaps the first wave in femtech - e-commerce platforms focused on women’s healthcare needs.
The subscription boxes catering to the region are based primarily out of the UAE, the Middle East’s largest e-commerce market. They include My Lily Box, headed up by Mashal Waqar, an entrepreneur in residence currently leading the femtech vertical at Hatch & Boost, Womooi, Orgabliss, LiZZOM Care and Pectiv.
When Pectiv started as a sanitary pads brand in 2014, the initial focus of the company was on activating its business-to-business (B2B) model. The company was manufacturing its pads with nano-technological advances in a single factory in China before offering them to distributors in Spain. But issues with distributors and logistics pushed its founder and CEO, Elias Abboud, to adopt a direct to customer (D2C) model for his recent expansion into the GCC market.
In August 2020, Pectiv started offering its products directly to customers in the UAE, which today stands as its main market.
“We started our e-commerce business because of the idea of subscription boxes. The only one product that can perfectly fit the subscription model is sanitary pads,” he says.
Abboud cites the success stories of similar companies in the US like LOLA, which has raised $35.2 million to date and Cora, which has raised $26.6 million, who offer subscription-based services. “This business model is the future,” he says.
According to a Wamda Research Lab, 22 per cent of companies planning to offer subscription-based services in the first half of the current year operate in healthcare, which was the top sector of choice before others like entertainment (17 per cent) and e-commerce (13 per cent).
The appeal that startups like My Lily Box and Pectiv find in subscription boxes ties primarily to the need for providing not only convenience, but also privacy for women in the GCC when it comes to their health and hygiene.
“When it comes to subscription boxes in general, there has been a growing trend in the region, so we’ve seen a lot more focus on things like Glam Box and beauty focused subscription boxes,” says Waqar. “Now, there’s more awareness. There is definitely a huge potential for subscription-based services and I believe it's just going to keep growing onwards from here.”
Accessibility, education, and customer social engagement are the three pillars behind My Lily Box, according to Mesmar and Waqar, and which Smith also cites as essential for femtech, particularly in the GCC.
“What is important is this ability to do things privately, autonomously, and conveniently, particularly when it comes to quite taboo things in your health,” says Smith. “That is something that we are trying to perfect in the Saudi Market.”
An educational wave
Attracting loyalty will be crucial to these subscription boxes and other femtech products and one way to do so is by building an online community to offer a safe, educational space to explore female health away from cultural restrictions. Since female health and hygiene is widely overlooked in the Mena region, the success of femtech startups is contingent on changing these cultural taboos.
“First, we want to change the taboo when it comes to women’s healthcare. Then, we want to change the culture and behaviour around how seriously we take women’s health and how seriously we take women,” says Waqar.
My Lily Box is hoping to achieve this through its mobile app, which it plans to launch next year after raising investment. The app will serve as a platform to create an educational online community to “de-stigmatise and normalise” access to information around feminine hygiene, according to Mesmar.
“We are going to have an educational section within the app where we feature non-judgmental discussions from trusted resources, including life coaches and physicians. You can consume these educational discussions, you can choose to start blogging with your peers, you can ask questions in Arabic and English,” says Mesmar.
Having such a platform will help to build loyalty and a sense of belonging according to Waqar.
“People love feeling like they belong, it’s all about the experience as well. That is something that people really, really, value in the region and something that they are definitely willing to spend on,” she says.
Pectiv is also planning to launch its own mobile app later this year to build out its own online community. Huda Beauty’s investment and venture building arm HB Investments is also planning to join the women’s wellbeing and healthcare sector this year with a startup focused on empowering women “to explore their feminity, on their own terms”, according to its website.
One consequence of the pandemic has been greater consumer interest in their overall wellbeing. For femtech, the impact is already being felt as women take greater interest and control over their health.
“People are more interested in healthcare. So, now you’re seeing healthtech-focused funds emerging in the region for the first time. You’re seeing some of the larger public funds in Saudi Arabia specifically saying we want to focus on healthtech. So, all of this as a general movement is helping us,” says Smith. “The opportunities for the UAE, Saudi Arabia, and the GCC to become a hub for innovation for women healthcare is really there.”
Mesmar is also optimistic that the hesitancy investors in the region have demonstrated will also dissipate now that younger, more digitally-native investors are coming to the fore.
“We’re talking about investors who are millennials, these investors will be encouraging and supportive, and they will be heavily investing in women-led businesses and women entrepreneurs,” he says. “We know that the Mena region is ready and has the right demographics and right blend of different communities and disposable income. This blend is not only appealing to investors but also entrepreneurs.”