The True North Digital Health & Wellness Fund

Written By Divin Kang
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True North is committed to strengthening our focus on Digital Health and Wellness with our first fund. Globally, healthcare funding for private ventures and companies reached a new quarterly record in 2020, with $21.8 billion invested in Q3, and 18% growth quarter-over-quarter [1] . Digital Health leads this growth within healthcare, growing at four times the rate of the overall sector, and North America maintains the majority of deal share in both Digital Health and Wellness more broadly. Enabled by tech, health and wellness, is booming and there is no short supply of start-ups or ventures focused on this space. After extensive research and analysis, we have prioritized three key verticals marked by strong investment activity and potential for wide-reaching impact: Aging Populations, Women’s Health, and Behavioural Health. In line with our impact investment principles, these verticals also address United Nations Sustainable Development Goals #3 (good health and well-being), #5 (gender equality), and #10 (reduced inequalities). Let’s explore each further:

Physical challenges of the global pandemic have exposed holes in our long-term care industry that will only worsen as our population rapidly ages, calling for technology-enabled solutions in aging care.

By 2050, 25% of people living in Europe and North America will be aged 65 years or older, representing one of the most significant social transformations in the coming century [2]. This rapidly aging population, a shortage of caretakers, and the effects of Covid-19 on long-term/elderly care have increased demand for healthcare solutions and societies to provide higher quality care. As a result, North American and European aging care markets are expected to grow by approximately 7% annually between 2020-2027 [3]. Digital health in aging will dominate this growth, expecting to reach over $500 billion within the next 4 years, at a 29% CAGR [4]. Enabled by emergent technologies such as Internet of Things, assisted living tech, remote monitoring, and digital home care, opportunities to invest with an impact in the aging care market are immense.

In 2020, we invested in Callaly, a UK-based period care brand challenging the way we think about menstruation. As part of our increased focus on Digital Health and Wellness in this Fund, Women’s Health will continue to be a central theme.

The rise in women’s disposable incomes and the increase in numbers of middle- to older-aged women has accelerated demand for high-quality women’s healthcare, increasing investment opportunities in the market. Women aged 65+ are the fastest growing segment of the U.S. female population, and this group spends 50-55% of their income on healthcare alone [1]. In the U.S., women control 80% of household healthcare decisions, and spend 29% more on healthcare than do men– it is clear that investment into Women’s Health and Femtech has the potential for wide-reaching impact [5]. The sector benefits from innovations targeting everything from infertility to breast cancer management, enabled by technology. Through 2020, $1.3 billion was invested in digital health companies targeting fertility and pregnancy, making up 65% of Femtech funding, and Femtech overall is expected to grow at a CAGR of 12.7% through 2030 [6, 7]. Historically, little attention has been given to differences in how women access healthcare and health products: often driven by public funding, developing solutions in women’s health accounts for just 4% of overall R&D funding for healthcare products and services [5]. Investment in this space is long overdue, and the opportunities for private investors to make an impact in a virtually untapped market is vast.

An increased focus on mental and behavioural wellbeing underscores an increase in investment activity, and highlights potential for high impact through technology-focused solutions.

In 2020, Social distancing and isolation as a result of the Covid-19 pandemic thrust individual mental health and wellness into the spotlight. 26% of adult Americans, about 55 million people, are affected by behavioural and mental health disorders each year [8]. In 2020, 40% of Americans aged 18 and over were affected by at least one mental health condition, and Covid-19 has the potential to result in a 50% increase in the prevalence of behavioural health conditions [8]. Despite this prevalence, pre-pandemic government spending on mental health services represented just 2% of countries’ overall healthcare budgets [9]: this presents a tremendous opportunity for mental and behavioural health focused ventures to address this gap in care. In 2020, mental health start-ups raised approximately $1.8 billion, representing a 70% increase from 2019. Ventures such as Calm and Headspace, offering at-home, digital mindfulness and mediation solutions, have increased in popularity, and received over $175 million in funding combined [10, 11]. As advocacy for mental and behavioural wellness continues to gain traction, technology-enabled care is at the forefront of innovation in this space: by 2027, behavioural health software and services will be worth $5 billion, growing at a CAGR of 11.1% [12].

Solving some of the biggest healthcare challenges in our times will require active participation from private investors to drive innovation. True North is proud to announce our commitment to the Digital Health & Wellness space with our first fund.

To learn more about our Digital Health & Wellness Fund, and how we connect investor capital based on the UN SDGs with impactful ventures around the world, please contact Fund Manager, Kai Chen (kai@truenorthimpact.com).

Divin Kang
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