Fertility support startups banked $345M in 2021. Here's why the business of family planning is booming

Family planning has become fertile ground, pun intended, for healthcare startups, and this fast-growing sector is driven by tailwinds such as demographic shifts in the workforce and rising rates of infertility.

Fertility benefits, which could include egg freezing, in vitro fertilization (IVF) and surrogacy, have become a top workplace perk as companies try to attract talent and remain competitive in a tight labor market.

As of 2020, more than two-fifths (42%) of large U.S. employers—those with over 20,000 staff members—offered coverage for IVF treatment, while almost one-fifth (19%) offered egg freezing. Among smaller companies with over 500 employees, about a quarter (27%) offer coverage for IVF treatment.

Just a few years ago, novel perks like fertility benefits were only offered by Silicon Valley trailblazers like Facebook and Apple. 

More employers are realizing that support for fertility treatments and family building are a real medical need, not just an offering that's nice to have, said Pete Anevski, CEO of employer-focused fertility benefits company Progyny, during a recent interview.

"It's now a necessary part of [employers'] benefit offerings. We now serve 30-plus industries, so it's pretty ubiquitous. And, with a tight labor market, you need to offer an attractive benefits package," he said. Progyny provides fertility benefits for employees at large firms and has doubled its client base in just the past year. 

"We started six years ago, and it's astonishing to see the pace of change," said Tammy Sun, co-founder and CEO of Carrot Fertility, speaking during Fortune's recent Brainstorm Health event. "Human resources leaders are responding to what employees want and the products and services that engage them and drive better health outcomes and return on investment. In the past five years, fertility benefits have gone from a 'nice-to-have' to a 'must-have,' and the breadth of who is included encompasses LGBTQ people and males." 

The business of fertility treatments is soaring, with analysts expecting the industry to reach $41 billion by 2026, fueled, in part, by the fact that 1 in 8 couples have trouble getting pregnant or sustaining a pregnancy, according to data from the Centers for Disease Control and Prevention. Fertility services also help single parents and couples within the LGBTQ community start a family. 

And the sector has attracted big investment dollars. In 2021, fertility support startups in the U.S. raised $345 million in venture capital, up 35% from $254 million in 2020, according to data from Rock Health, a venture fund dedicated to digital health. Funding has more than doubled since 2019, when companies in the fertility support market raised $133 million.

More broadly, startups focused on women's health raked in $1.4 billion last year, up 80% from $773 million in 2020, Rock Health reported.

Progyny, the first fertility benefits company to go public, claims that its data-driven platform leads to better outcomes, and that translates into significant downstream, medical cost savings for self-funded employers in the form of lower maternity and NICU costs as well as a reduction in chronic care costs associated with low birth weight babies, Anevski said.

Progyny has grown its client base to more than 265 large self-insured employers, up from 179 clients a year ago. Those clients represent about 3.9 million covered lives. The company brought in $501 million in revenue in 2021, up 45% from $345 million in 2020.

These companies are seeing strong growth as there is a significant gap in the market to improve the overall patient experience for individuals and couples seeking fertility support, executives say. Only 15 states require insurance to cover fertility treatments. And even when insurance covers pricey procedures like IVF, couples and individuals face many barriers to getting care.

Carrot Fertility's Sun was diagnosed with premature ovarian failure while seeking egg freezing services in her mid-30s, she told Fierce Healthcare back in March. That meant she was at risk for early-onset menopause, something she hadn’t considered could happen to her so young, since the average age that women begin to experience menopause in the U.S. is 51.

"My experience and interaction with the fertility healthcare system was pretty poor and very broken," she said during the Fortune Brainstorm Health event. "And I think about different ways that same-sex couples would hit this barrier and how single-intending parents would hit that barrier. Fertility healthcare is a fundamental part of human healthcare. That's why we wanted to build something that could be fundamentally transformative."

Carrot Fertility, which launched in 2016, has banked $115 million in VC funding to date backed by investors including Tiger Global Management, U.S. Venture Partners and Silicon Valley Bank.

Carrot Fertility partners with companies to provide fertility benefits to employees including offerings for egg and sperm freezing and IVF as well as less commonly covered services including adoption and surrogacy. The company also has added benefits for menopause and low testosterone services to its platform.

Along with medical carriers, there are a growing number of specialty vendors offering solutions in the fertility benefits space including ARC Fertility, WIN Fertility and London-based Gaia, which uses predictive technology to offer the world’s first-ever insurance product for IVF.

Startups making inroads in the fertility benefits/family planning sector include digital health "unicorn" Maven Clinic, Modern Fertility, which was acquired last year by digital health company Ro in a deal valued north of $225 million, Legacy, a digital fertility clinic for men that just scored $25 million in series B funding, and Kindbody, which builds tech-enabled clinics offering IVF and egg freezing. Kindbody has raised $154 million to date, according to Crunchbase.

Alife Health recently snagged $22 million in a series A round to scale up its technology, which uses artificial intelligence tools to lower costs and improve outcomes for IVF treatments. And Future Family, a startup combining fertility financing and care support, also recently bagged $25 million in series B financing. Other emerging companies in the market include reproductive support startup Noula Health and a company called Sunfish that offers fertility financing.

Clinical testing giant Labcorp also is pushing into this burgeoning market by picking up Ovia Health, the developer of a digital platform for tracking pregnancies and coaching new parents through infancy.

But fertility is not just a "women's health" issue, and companies in this space are expanding their services to be more inclusive.

Of all infertility cases, approximately 40% to 50% are due to “male factor” infertility.

"Historically, my wife and I went through this. It was thought of as a women’s health issue. But that puts the burden on this solely on one party. By including fertility benefits and services for employees, it's not just about making this accessible for women, it’s about making it accessible for all," said TJ Farnsworth, founder and CEO of Inception Fertility, a fast-growing network of fertility clinics in North America. 

"Everyone’s pathway to parenthood might look a little different," he added during Fortune's Brainstorm Health event.

"When my wife and I got married, we wanted to start a family. After two and a half years of every type of infertility treatment and three pregnancy losses, I thought, 'I can do this better.' We are now the largest provider of fertility services in North America," said Farnsworth, who was motivated to launch Inception Fertility to offer a more holistic approach to fertility treatment that considers the physical, psychological and mental aspects of infertility. 

The growing demand for fertility services also is a supply/demand issue, Sun said.

"We are graduating one fertility specialist for every 11 million Americans every year. We see shortages and massive retirements. By using technology and innovative care models, we are trying to increase capacity and access," she said. "And not just in major cities. There are a lot of flyover markets that don’t have a fertility specialty care center at all or not enough physicians to meet the demand for services." 

Anevski said Progyny has significant runway in what is still a largely untapped market. "The percent of the market that’s still underserved, the percent of the market that we’ve penetrated versus what’s out there, 265 clients and 8,000 large self-insured employers, not including the labor market, there is still significant opportunity and we are very early on that curve," he told investors during the company's recent first-quarter earnings call.

Sun said, "Fertility healthcare comes to the table as a fundamental part of the healthcare stack. There's a lot more work to do, but it’s an exciting moment."