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Fertility financing is an opaque but growing corner of the venture-backed reproductive health market.

Why it matters: The nascent business is beginning to show cracks as companies struggle to differentiate, with some pivoting away from lending entirely and others using biological data to offer financial guarantees for fertility services.

The big picture: The reversal of Roe v. Wade, combined with women delaying the age at which they consider becoming pregnant, has fueled a rise in funding of venture-backed companies focused on reproductive health.

In 2022, financing startups were the sixth most heavily funded health vertical.

Context: Financing is necessary for many people undergoing fertility treatment. In-vitro fertilization (IVF) — the process of collecting mature eggs from ovaries and fertilizing them with sperm in a lab — is one of the pricier and more popular components.

A single IVF cycle can cost up to $30,000, and with an age-dependent success rate between 38% and 49%, most people need two to three rounds to have a child.

People are increasingly financing fertility treatment because they can't simply wait and save. Fertility rates in women decline sharply after age 35.

"You can't just say, 'I'll wait five years to save.' People need to start this journey soon," says PatientFi CEO Todd Watts.

Table comparing APR and membership fees for companies that offer financing for in-vitro fertilization (IVF) treatment.

IVF financing landscape

Data: Axios research; Notes: CapexMD did not respond to Axios' requests for comment. Data is from its website. Sunfish's membership, which includes refunds based on success, is optional. Table: Axios Visuals

Fertility financing companies boast a personalized approach with financial, medical, and emotional support — often in exchange for higher interest rates and membership fees not charged by traditional lenders.

By the numbers: APRs at Sunfish, which works with a variety of lenders to offer financing, can be as high as 36%, while some traditional lenders' highest rates for personal loans don't exceed 18% or 19.5%. (Average rates are 12.2%.)

Leaders at Sunfish and Future Family attribute their higher maximum rates to the wider array of services they offer, and Sunfish CEO Angela Rastegar emphasized the company's ability to offer a wider range of loans to more borrowers, including those with fair credit.

"Sunfish is more than just a lender; we offer a full service for people's journeys," CEO Angela Rastegar tells Axios.

"The meta trend here is how fintech is embedding to drive a better consumer experience and give people things they want: additional services and better, more affordable credit options," Future Family CEO Claire Tomkins says.

Context: These financing companies often work directly with fertility clinics and send the money directly to them, rather than to the patient, and offer membership options that can include additional services.

"We are managing your medical payments," says Future Family's Tomkins.

Washington, D.C., resident China Dickerson started IVF in 2022 and received loans from Lending Club and a fertility startup called Hera.

What she's saying: Dickerson tells Axios she didn't initially care about fertility-specific components of the loan like nurse support — but found them helpful later.

"My husband and I do pretty well financially, and I still don't think these loans are conducive to a middle-class family being able to afford IVF," says Dickerson. "The application standards are so high."

Between the lines: In 2022, with a very good FICO score, Dickerson received a $6,500 loan for IVF at an interest rate of 4% from Lending Club. The company sent the money directly to her IVF clinic, and she paid it off in two years.

When she needed more assistance for additional IVF cycles in the winter of 2023, Dickerson first applied with Future Family but was denied — the company told her she needed a FICO score of 800 to qualify.

She applied again with Hera and received a $7,000 loan with zero percent interest. (The company no longer offers fertility financing; it sells fertility tests.)

"The nurse interaction [with Hera] was a key difference," recalls Dickerson. "I don't remember that I knew that was going to be a thing, but it ended up being a lot more of a personal experience."

Such service offerings beg a larger question of who is responsible for providing them.

Fertility financing startups "are clearly filling a gap felt by patients, so there's a reason they're doing it," says fertility researcher, investor and author Leslie Schrock. 

"But whether it's these companies' jobs or it should be left to the clinics is a different question."

Fertility-only financing is a tough business

Because of their narrow focus, companies only offering fertility financing can face obstacles like limits on the amount and kind of discounts they can secure.

How it works: Future Family charges a monthly membership fee of $599 for concierge nurse support and advertises exclusive discounts on fertility labs and medications. (After initially confirming both discounts in multiple interviews with Axios, Tomkins wrote in an email that the company has not offered lab discounts since 2020.)

The company also offers a zero-percent interest loan, but only at select clinics.

Yes, but: The company's advertised medication discounts occur as part of a partnership with partner pharmacy MDR, but five former high-level employees said many patients struggled to attain them because of limitations on geography and qualifying suppliers.

Future Family's zero-percent interest loan, per three former employees, is only available to people with annual incomes at or above $200,000 and FICO scores at or above 800. 

Inside the room: Future Family tried to raise a Series C in the first half of 2023, per four of the former employees, but paused after investors struggled to identify a clear market differentiator and justify the company's financial losses, per three of the people. (Tomkins said the company paused its Series C efforts to focus on profitability and still raised $13 million from inside investors in 2023.)

Future Family has undergone three rounds of layoffs and is now at about 40 employees, smaller than half the size it was at its largest, per seven former high-level employees and one current high-level employee — all of whom requested anonymity for fear of reprisal — and publicly accessible LinkedIn data.

Meanwhile, the company's support nurses do not dispense medical advice and instead refer patients to their primary care team, though several employees said patients valued the emotional support.

The latest: One former high-level employee source and two other sources familiar tell Axios that as of May 2024, Future Family stopped providing loans and will update its customers in June or July as to their status.

Tomkins disputed this claim and said Future Family experienced a three-week delay in issuing and funding loans "due to a planned operational change" which she said will be completed by Monday, May 13. 

Flashback: Hera CEO Thiv Paramsothy remembers clearly the moment his company decided to stop offering IVF loans. It was summer 2023 and federal interest rates were continuing to climb.

"The market changed a lot from a low-interest rate market to what we're living through now, and our partners wanted to change the agreements," Paramsothy says.

For example, some of Hera's lending partners wanted to raise the criteria for its zero-percent loan to an 800+ FICO score and add a requirement for an applicant's cosigner to have the same score. Others wanted to stop offering zero-percent loans altogether.

"You just started seeing more and more people be unapproved," Paramsothy says. "It went away from our mission of making it affordable to making it a high-interest rate endeavor," he recalls.

What they found: Breadth is important to survival, according to PatientFi CEO Todd Watts.

PatientFi also covers areas like plastic surgery, dentistry and ophthalmology, which has allowed the company to remain and grow in the IVF loan space, Watts says.

"Other lenders do a fraction of the volume we do," says Watts. "That's why we're not completely focused on one category."

PatientFi's breadth also enables it to offer "a majority" of its IVF loans at an interest rate many of its competitors want or claim to — zero percent, per Watts.

"The larger you get, the cheaper your cost of capital becomes," Watts says.

Startups like venture-backed Gaia, Sunfish, Future Family, and Questa Capital-backed PatientFi have emerged, joining privately held legacy players CapexMD and Arc Fertility.

Of the startups, San Francisco-based Future Family is financially the furthest along, having collected $134 million across Series A, Series B, debt and inside rounds from investors including Acrew Capital, Munich Re Ventures and Triventures since its founding in 2016.

Founded in 2019, London-based Gaia has raised $23 million total in seed and Series A rounds from backers including Atomico.

Santa Monica, California-based Sunfish debuted in January 2023 and has raised $4.8 million in total seed funding.

Zoom in: Fertility-only financing startups could demonstrate a value-add by offering a scientifically guided system of checks and balances before an IVF cycle or fertility procedure is approved, fertility experts tell Axios.

Such a setup would incorporate medical assessments and biological data to provide people with estimates of their fertility and financial insurance based on those estimates.

What we're watching: At least two venture-backed fertility financing companies are in the early stages of pursuing such approaches.

For example, Sunfish's optional IVF membership, which costs an average of $250 a month, allows unsuccessful IVF patients to get up to 90% of their money back. The program runs on a predictive model that uses biodata such as sperm quality, womb information, and hormone data to calculate a couple's chances of success and creates a refund based on that score.

Gaia covers three IVF cycles and fully refunds people who do not end up with a child. Its program also uses predictive modeling based on biodata.

Fertility financing in a post-Roe era

There is robust demand for fertility financing, but execution has proven complex and nascent startups haven't demonstrated a clear edge over traditional lenders.

a collage illustration of money, petri dishes, in vitro fertilization and a cutout of a pregnant person 

Health tech deals

Fertility financing is an opaque but growing corner of the venture-backed reproductive health market.Why it matters: The nascent business is beginning to show cracks as companies struggle to differentiate, with some pivoting away from lending entirely and others using biological data to offer financial guarantees for fertility services.

Fertility financing in a post-Roe era

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