Defining the B2F Landscape
Trends in Female-Focused Startups
Originally written for Two Sigma Ventures. Special thanks to Frances, Erhan, Dan, Colin, Andy, Kyra, Villi, and Mickey for reviewing.
Women influence 80% of all consumer spending. When the global market is considered, women initiate or execute purchases worth 20 trillion dollars annually. This astronomical amount is twice as large as the economies of China and India combined.
People are noticing this spending power. With the prominent rise of billion-dollar businesses such as Stitch Fix, Rent the Runway, and Glossier, the market for companies focused on female purchasers has grown hot over the last few years. Investors and founders alike are racing to capture this huge market value, and the resulting waves of well-monetized, female-focused startups have given rise to an interesting new ecosystem: business-to-female (B2F) startups.
B2F, or business-to-female, includes products and businesses that target the day-to-day needs of modern female-identifying women. It is different from female-founded businesses and much broader in scope than sector-specific developments like healthcare-focused FemTech or beauty CPGs, although these are also included under the B2F label. B2F products and businesses are especially interesting now because they ride high on societal trends such as a record number of women obtaining college degrees, entering the workforce, and delaying childbirth.
To define B2F and learn more about these societal trends, I spoke with over 30 investors, founders, and technologists about their experiences and perspectives. I discovered that many people were talking about products and services geared towards women, but few people were thinking about them from the greater umbrella of female-focused businesses and the common driving forces behind these businesses.
After digging in more on this space, I learned that there is significant friction accompanying shifts in how women and their families manage their lifestyles and work today. The pain points and market gaps caused by friction from these shifts make the playing field ripe for innovation. Many new and incumbent players are jumping in on 4 main trends as they build large-scale B2F businesses and impact lives.
Trend 1: Growth of the Convenience Economy
As more women obtain college degrees and enter the workforce, they still disproportionately take on most of the household and familial duties. In fact, women represented a record 49.6% of the workforce in 2018, with 42% of these women serving as both moms and their family’s primary breadwinner. Additionally, research has shown that at least one-third of men don’t help out with chores at home. The dual burdens of life and work mean that a large number of women are increasingly crunched to optimize for time and efficiency in their daily routines.
This keen, day-to-day pain point has birthed a universe of B2F convenience-based products targeted at helping these women optimize their time at home.
A flourishing new B2F convenience economy has developed as a result of this new focus on optimizing personal time. Over the last few years, there has been an explosion of D2C businesses that reduce the time and mental energy needed to shop for day-to-day home products. Larger businesses in this space include Stitch Fix, Rent the Runway, and Birchbox, all of which target a primarily female audience. Recently, there has been a slew of smaller, leaner startups that seek to improve on the models of these incumbents and reach into areas like home decor (SpruceUp), skincare (Elemen), investing (Ellevest), and much, much more. These second-wave companies are more focused on data-driven customization, and they leverage the latest developments in artificial intelligence and data processing to make products that are custom-fitted to the needs of the buyer.
The B2F convenience economy will only accelerate as society continues to shift and more pain points open up with busy women looking to juggle life and work. As business models are proven, customization algorithms are refined, and last mile logistics are further improved, it would not be surprising if B2F services were to drive a fundamental transformation in the landscape of shopping and home management within the next ten years.
Trend 2: Increased Workplace Diversity
As women continue to enter a mostly male-dominated workforce, workplaces are becoming more diverse and evolving to accommodate this shift. Although this change hasn’t been without friction, as exemplified by #MeToo and the many voices speaking up for increased diversity and inclusion, there has also been great growth in B2F startups seeking to address the gaps that come with such a shift.
Over the last few years, a new set of startups has sprouted catalyzing companies to adapt their organizational and physical structures to be more inclusive towards their workforces’ shifting demographics. This includes new HR startups helping these companies rethink their approach to broader employee retention (such as through facilitating expanded maternity leave and unbiased hiring checks), businesses improving diversity and inclusion training through new digital solutions, and even specialized services restructuring physical offices to have designated private care spaces for mothers and others who might need them.
The workplace-targeted portion of the B2F startup ecosystem is thriving as a result of changing workforce demographics and the market gaps left by friction from these shifts. This space is on a brisk upward trajectory as more B2F companies are launched and funded to help women — who are 49.6% of the labor force and growing — as they tackle barriers and succeed at work.
Trend 3: The FemTech Explosion
Over the past decade, topics surrounding female reproductive health have become significantly less taboo. This trend towards de-stigmatization, combined with a greater public interest in quantifiable health (i.e. through Fitbit-style metrics), has driven forward a rapidly growing FemTech space where startups are using technology to reinvent women’s healthcare. There has been an explosion of apps, goods, and devices targeting everything from period care to fertility monitoring to sexual wellness. FemTech is one of the most thriving areas of the B2F landscape, and the space has the potential to expand exponentially as these products continue to penetrate the market and increase public consciousness around women’s health.
Another major trend pushing forward this wave of B2F femtech startups is how working women (and as a result, their partners) are delaying childbirth due to career prioritization. This has led to a heightened interest in reproductive health especially as the average age of first-time parents rises. This interest is not just limited to people’s personal lives; in fact, companies have also begun looking to support their employees’ reproductive wellbeing through offering benefits such as access to egg and sperm freezing. These addressable pain points, impacting both life at home and at work, further set the stage for the launch of new startups that offer services and products to fill these needs.
Trend 4: Rise of Female-Focused Communities
As more of the world becomes connected through social media and the Internet, women are moving online to carve out their own spaces and find community. With more time occupied by work, modern women are finding it harder than ever to organically find community. Although this challenge of community reaches everyone in the workforce, the problem is especially acute with women due to higher levels of online harassment on social media platforms and male-dominated workplaces.
As a result, female-focused communities have proliferated online. From Elpha to Chairman Mom, women-only forums and platforms are taking off at unprecedented rates across many demographics of women. These B2F companies tread the line between maintaining an intimate, trustworthy community and sustaining viral growth. It still remains to be seen how these businesses will develop, if they will evolve into more focused versions of today’s social media behemoths, retain their focus as tight knit online communities, or perhaps grow into something completely different. This shift transcends just virtual communities as well, and we’ve recently seen a whole new crop of companies focused on physical co-working spaces and communities tailored to women, such as The Wing and The Coven. Although not without controversy, it will be exciting to see how both of these types of communities continue to develop.
Taken together, these four trends paint a bright picture for the future of B2F startups. More women than ever are graduating with college degrees and entering the workforce. The changes accompanying this massive trend are causing paradigm shifts in the way women and their families are managing their lifestyles and work. With the advent of more advanced technology and heightened public awareness of women in the workforce, startups are leaping in to fill market gaps caused by this societal shift. This response has birthed countless innovations and an entirely new B2F ecosystem targeted towards women, which in turn has led to rapid developments in the convenience economy, targeted workplace services, and virtual communities. These are just a few of the exciting areas and avenues in which B2F is growing. No matter how the B2F ecosystem continues to play out — one thing is known, and that is how $7T in female-influenced annual consumer spend is not a market force to be taken lightly.