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Fertility technology startups are in the midst of a funding frenzy, putting the category among the sixth most heavily funded treatment verticals in 2022, per Rock Health.

Why it matters: Demand for fertility services is on the rise, and its increasingly opaque and inaccessible nature has left room for nimble, tech-forward companies rushing to fill the gaps, Erin writes.

Driving the news: Several harsh realities about family planning and fertility have been cast into the spotlight in recent years:

The economics of infertility treatments remain heavily opaque, and insurance coverage varies dramatically by state and provider. 

The fertility industry is highly inequitable, disproportionately impacting LGBTQ people, low-income people and people of color.

The overturn of Roe v. Wade enabled states to pursue reproductive health legislation that can create challenges for patients and providers in states including Arizona, Florida, Louisiana and Tennessee.

What they're saying: Employers, entrepreneurs and investors tell Axios they see their roles as more important than ever, with startups responding to employer demands by expanding their offerings to include reproductive care.

"We believe the ability to build a family is a basic human right," says Sunfish CEO Angela Rastegar. 

"Women want control because it's being so restricted," Lori Evans Bernstein, the CEO of virtual-first women's health startup Caraway, told Axios last fall.

"Traditional reproductive endocrinology practices are the closest analogy to what we do, but they’re just not able to serve enough patients," says Amy Zwanziger, the CEO of a startup called Turtle Health that offers fertility testing at home.

"Addressing infertility requires innovations that drive toward more inclusive — and ultimately more effective — family care," says Lux Capital partner Deena Shakir.

By the numbers: Fertility startups banked a record $424 million in the last quarter of 2021, per a Rock Health report. Meanwhile:

Some 18 million women of reproductive age live in locations without access to fertility treatment centers. 

Though 1 in 8 women experiences infertility, only about a third of women in the U.S. with fertility problems have ever used fertility services.

Zoom in: As existing reproductive health companies' valuations rise, new startups are rushing to fill extant gaps in care. For example:

Sunfish Technologies, a company offering financing support for egg freezing and IVF, premiered this month with a $3.8 million seed round.

Maternity care provider Oula this month collected $19.1 million in Series A funds for a hybrid model that unites midwives and obstetricians.

The first maternal and family health startup to reach coveted unicorn status, Maven Clinic in November collected $90 million in Series E funds.

Posterity Health, a digital male fertility treatment provider, this month pulled in $7.5 million in seed funding.

Turtle Health, which is trying to replicate a full-scale fertility evaluation in the home, debuted in December with $5.4 million in seed capital.

Legacy, a celebrity-backed sperm testing and storage startup, in May banked $25 million in Series B funds at a valuation of $150 million.

Combining fertility financing and care support, Future Family in April raised $25 million in Series B funding at an $80 million valuation.

Yes, but: Although many of the companies in the sector focus on women and their reproductive systems, half of all infertility cases involve problems related to sperm, says Sophia Yen, a Stanford clinical associate professor and CEO of women's telehealth company Pandia Health.

"This is not just an issue that heterosexual women should be worried about," says Legacy CEO Khaled Kteily.

1 big thing: Fertility tech banks investor dollars

Illustration of a quarter surrounded by sperm.

By the numbers: Venture funding of fertility-focused technology has risen steadily over the last decade, with $854.5 million invested in 2022, per PitchBook.

That compares with $305.7 million in 2017 and $134 million in 2012. 

2. VC funding for fertility tech soars

Psychedelic medicine infrastructure company Journey Clinical has raised $8.5 million in Series A funding, CEO Jonathan Sabbagh tells Erin exclusively.

Why it's the BFD: Confronted with a worsening mental health crisis, a shortage of psychiatrists and stale treatment options, U.S. regulators are beginning to consider psychedelic medicines — treatments that Journey Clinical aims to support — as an alternative. 

Deal details: Union Square Ventures led the round, bringing Journey's total funding to roughly $12 million and marking the firm's first investment in the psychedelics sector.

Other participants included AlleyCorp, Fifty Years, Able Partners, Gaingels, Palo Santo, PsyMed Ventures, Coalition Partners, Mystic Ventures, Colibri, Satori Capital and individual backers.

State of play: Boosted by hopeful research, rising investor interest and an increasingly friendly regulatory milieu, market appetite continues to grow for companies focused on psychedelic treatment.

Enthea, a benefits provider for psychedelic-assisted therapy, in December raised $2 million in seed funding.

Mindstate, a startup applying AI-powered drug discovery to create a pipeline of potential psychedelic therapeutics, last February raised $11.5 million in seed funds.

MindMed (Nasdaq: MNMD) in 2021 became the second psychedelic drug developer to go public in the U.S. after Compass Pathways (Nasdaq: CMPS) debuted in 2020. 

How it works: Journey offers therapists a plug-and-play platform to conduct psychedelic-assisted psychotherapy, or the supervised use of psychedelics alongside therapy.

It charges therapists a $200 monthly fee and charges patients $250 for the intake process and $100 for follow-ups.

That includes Journey's telehealth platform, which allows it to verify patients' eligibility, track outcomes and monitor for adverse effects. 

The backstory: Sabbagh started Journey after realizing that therapists interested in providing psychedelic-assisted therapy had no back-end support to do so.   

"So we built a platform that gives therapists everything they need to incorporate this into their practice," Sabbagh says. "Our primary client is always the therapist."

What's next: The company is starting with ketamine, and Sabbagh says it plans to expand to other treatments, like psilocybin and MDMA, as they are approved by regulators.

What they're saying: Amid a provider shortage and scant resources and standards for existing clinicians to provide psychedelic-assisted treatment, Journey's offering makes rational sense, says investor and USV general partner Rebecca Kaden.

"They're empowering practitioners to broaden the scope of their toolkit" and working with them "to decide whether the patient is a good fit," Kaden says.

3. The BFD: Journey Clinical clinches $9M

Animated illustration of a hundred dollar bill in psychedelic colors with Benjamin Franklin wearing swirling glasses. 

Crescendo Health, an SF-based health data startup focused on aiding clinical trials, has raised $3.4m in seed funding from Define Ventures and other undisclosed backers. https://axios.link/3ZZVqFl 

Nourish, an SF-based telehealth platform for nutrition, has raised $8m in seed funding. Thrive Capital led and was joined by Susa Ventures, Operator Partners, Box Group and YC. https://axios.link/3QZjST6

Eir Partners has merged integrated health care company ReviveHealth with virtual care services company SwiftMD.

New Ruipeng Pet Group, a chain of around 1,900 veterinary hospitals in China, has filed for an IPO. It plans to list on the Nasdaq (RPET) and reports a $156m net loss on $607m in revenue for the first nine months of 2022. Backers include Hillhouse Capital (35.8% pre-IPO stake). https://axios.link/3Dd8OMi

4. Deals o' the day

Verily has named former SignalPath CEO Brad Hirsch head of product and implementation.

Intuitive Ventures has named Murielle Thinard McClane director and promoted former associates Vivian Golfin and Jotthe Kannappan to senior associates. 

Scan Group has promoted former SVP of network management Karen Schulte to president of Medicare.

AMC Health has named James Considine COO.

Wheel has named former AliveCor EVP of global enterprise sales Vincent Balsamo chief revenue officer.

5. It's Personnel

🤝 Situational awareness: Erin on Wednesday is moderating a live webinar and panel discussion covering the findings from SVB’s annual health care investing report. It will feature TPG Life Sciences' Carolyn Ng, Andreessen Horowitz's Julie Yoo and SVB's Jon Norris. Tune in.

🍾 Claire enjoyed a Chicago "speakeasy" experience last weekend at The Roar on Rush, complete with craft cocktails and a gin tub.

❤️ Thanks for reading, and extra thanks to newsletter editor George Moriarty and copy editor Brad Bonhall. Please ask your friends and colleagues to sign up.

January 24, 2023

1 big thing: Fertility tech banks investor dollars