The AgeTech Market — An impact investors perspective

Published in

Ananda Impact Ventures

11 min readOct 29, 2020

Ageing is one of the greatest social and economic challenges of the 21st century for European societies. The global pandemic with its severe health effects on elderly people in particular and the governmental call for social distance has only increased the severity of some of the challenging situations older generations are facing. The last months have shown both; that the elderly care market still struggles with outdated and inefficient processes, while at the same time the state of emergency has also highlighted the added value digital solutions can create for older people.[1] In this article, we want to contribute our perspective as an impact investor on the potential and challenges tech-enabled solutions for our ageing society, the so-called AgeTech market, hold.

Silver Tsunami: On the verge of a demographic revolution

The so-called Silver Tsunami is beginning to arrive at the European shores combining crucial changes on an unprecedented scale in the demographic structures across EU countries; the increase in life expectancy, declining birth rates, smaller households and growing urbanization.[2]

As demographic statistics from the European Commission demonstrate, people aged above 65 years will account for 30% of the EU population by 2070 (compared to 20% in 2019) and people aged 80 years or older will increase their share by more than 120% (13% compared to 6% in 2019).[3] Joseph Coughlin, MIT researcher and director of the institute’s AgeLab, names three drivers for the shift toward an older population. Firstly, people live longer — only 100 years ago we were expected to live to just the age of 50. Secondly, fertility rates have decreased significantly on a global scale. A third contributing factor to global ageing is the post-war generation of baby boomers, a particularly large generation which is currently entering its senior years all at the same time.[4]

All those developments will be creating challenges pressing us as a society to find innovative ways to care for our ageing population while reaching sustainable economic growth. From an impact investor perspective, we believe that AgeTech will play a crucial role in this. At its core, AgeTech is about creating substantive impact by empowering people — making the lives of seniors more independent, enabling them to choose how to age — to live in their own home (“ageing in place”), to stay healthy, to keep connected and to stay purposeful members of our society.[5] New technologies make creating impact for seniors scalable — elevating the AgeTech market to the forefronts of impact investing. In doing so the EU’s “silver economy” is expected to reach €5.7tr by 2025, up from €3.7tr in 2015, fueling the entrepreneurial opportunities in a sector that has shown itself relatively reluctant to change.[6]

Technology & Policy: Drivers behind the AgeTech momentum

While the tech-addicted millennial is the stereotype of a digital native, seniors have increased their screen time significantly over the last couple of years. The Economist puts the daily screen time consumption for seniors (65+) in one of its articles from 2019 at an astonishing 10 hours per day. [7] While the lion share is attributed to TV consumption, smartphone and computer usage are growing steadily. This new tech adaptation paves the way for a market serving tech-enabled solutions using this screen time to positively impact the lives of the seniors: The AgeTech market. And it´s not the tech entrepreneurs alone who are increasingly noticing the massive potential of AgeTech solutions. With the devastating effects of the pandemic at hand policymakers have fast-tracked some of the regulatory changes many healthcare advocates have been campaigning for in the last decade. For example, reimbursement is one of the key challenges for many AgeTech products focusing on digital healthcare services. Germany’s new Digital Healthcare Act (Digitale–Versorgung–Gesetz) entitling individuals covered by statutory health insurance to reimbursement for certain digital health applications, was already introduced last year. In lights of the ongoing global pandemic, however, the act received additional support from German policy makers, opening up a debate for even more measurements supporting the digitalization of healthcare services.[8]

Three Cornerstones of the AgeTech Market: What excites us the most

The AgeTech market is massive; covering all tech-enabled products relating to the demand of seniors. To narrow it down we identified three fundamental cornerstones of the AgeTech market creating notable impact: Physical & Mental Health, Financial Wellbeing as well as Occupation & Purpose.

Photo by Alessandro Vallainc on Unsplash

Physical & Mental Health

The good news is, we spend a large chunk of our life in good health. Looking at the EU the number of healthy life years at birth in 2018 averages at 64 years. The bad news is, after those years health decreases significantly. Almost half of the older people have at least one disability, oftentimes even multiple chronic illnesses. AgeTech products easing the burden of those disabilities by either promoting health, increasing physical mobility or supporting carers who in turn increase the quality of life for seniors are one of the most obvious advantages of digital products for seniors from an impact perspective.[9] Berlin based company Careship (disclosure: Ananda portfolio) for example provides a digital platform offering valuable advice, tailored support and companionship by the hour to senior people and their relatives. Currently, there are 4.9 million people dependent on care in Germany, of which 80 % are cared for at home. Almost half of these patients have an official, recognized “care level” and are entitled to services such as respite care. Yet only a fraction of patients and relatives make use of this important support funded by the German statutory care insurances. As a result, many elderly persons suffer from isolation, transfer to in-patient care prematurely or do not receive the care they urgently require. The mission of Careship is to enable these elderly people in need of care to enjoy life in a more self-determined way and thus Careship has developed a state-of-the-art, all-round solution, which includes providing advice to relatives, finding a qualified companion, providing transparent information and managing the entire reimbursement process.

While physical health concerns are mostly at the center of attention when it comes to solutions for the elderly; more and more often, loneliness is being identified as the root of a variety of health conditions. Human beings are social creatures and that doesn’t change when we are ageing. For seniors, who are used to socializing with family, friends and colleagues, entering a phase of increased isolation, is hard to deal with.[10] Research from the Association for Psychological Science shows that loneliness can be as deadly as obesity, alcohol misuse and heavy smoking. Translating this into numbers the study suggests that loneliness could increase people’s risk of death by around 30%.[11] People who feel alone are also more likely to suffer from dementia, heart disease and depression.[12] Sadly, in the meantime, over half of all people aged 75 and over, live alone and two-fifths of all older people say the television is their main company.[13] This development has gotten significantly worse during the past extraordinary months and creating digital interactions for isolated seniors has come to the forefront of the market attention. Especially people suffering from dementia carry an immense burden, which also affects their helpers and families. Patients lose their zest for life once activity levels decrease and interactions with the outside world become scarce. If cognitive skills are no longer stimulated and emotional memories fade, the sense of wellbeing quickly diminishes. Companies such as Media4Care (disclosure: Ananda portfolio) aim to increase joy of life for seniors: by inventing new ways to activate and strengthen their cognitive abilities and to keep them connected to their family members. A special tablet media offering provides various incentives, reaching from reminiscence of life events to mental stimulation, singing and relaxing that has become incredibly helpful for families to stay connected and engaged with their eldery loved ones.

A still vastly overlooked aspect of the healthcare planning process for seniors are care preferences for times of limited or lacking communication abilities of the senior individual: the advanced care/end-of-life planning. It is estimated that 70% of end-of-life conversations are prompted by a health crisis or emergency event while there are more and more decisions to be made in times of increased treatment options.[14] A company that is trying to digitize advanced care planning is the US-based startup Vynca, which has developed an end-to-end solution supporting health care organizations to implement and scale advance care planning so that every person’s care preferences are honored at the end-of-life. In 2018, Vynca secured $10.3 million in Series B funding. Vynca has been working on becoming the US leader in technology supporting education and engagement in advance care planning conversations, sharing decision making, digital completion of documents, and ensuring universal document accessibility for individuals, their caregivers, and health care providers across the care continuum.[15] Solutions guiding and supporting the elderly and their families in these sensitive and complex decision processes will become a relevant part of the AgeTech market.

Financial Wellbeing

Another devastating effect of the current healthcare crisis has been the negative effect on the financial wellbeing of seniors. A recent survey by the OECD International Network on Financial Education shows that seniors in most economies were already displaying lower levels of financial well-being prior to the COVID-19 pandemic and have been affected particularly in the past couple of months.[16] This is due to a variety of factors. Elderly people are facing higher risks of severe health effects and serious complications from the disease. As a result of this, they are also more likely to face stricter lockdown measures, limiting their possibility to maintain their working lives as usual. While creating AgeTech products supporting the elderly in providing pension, benefits and insurance plans securing a safe and decent life for seniors was already important prior to COVID-19, it has become an urgent need in the past couple of months.

However, the digitization of financial services for seniors does not come without its downside. With digital financial products being increasingly adapted, online fraud targeting especially elderly people is on the rise. While the costs of general financial exploitation of seniors within the EU have not been sufficiently quantified, estimates put the overall losses of US seniors at greater than $37 billion annually.[17][18] Online scams are increasingly part of this massive exploitation. A European example of a startup working towards preventing such scams is Kalgera, a personal finance platform for older or vulnerable people. Kalgera uses neuroscience and AI to detect and predict financial vulnerability to help prevent fraud.[19] As impact investors we expect and hope that more AgeTech products detecting and preventing such scams will become a viable part of the FinTech market for seniors.

Occupation & Purpose

Older people are now reintegrating much more frequently in the European labor market than just a few years ago: in Germany, the level of employment among 55 to 64-year-olds has seen one of the highest increases of all EU countries in recent years. In 2005, the employment rate among this age group accounted to 46% but increased to 66% within only ten years.[20] And even after retirement a significant share of seniors might want or will have to continue work. Creating digital products and platforms to facilitate this demand has already gained some interest and will continue to become an important part of the AgeTech market. US-based income-supporting platform Steady, for example, is a platform that connects flexible job opportunities to underemployed groups.

All the mentioned segments are often framed as solutions compensating disabilities. However, we don’t just tend to live longer lives; we now live healthier, more active lives. Nevertheless, the youth-focused culture like the one we live in tends to neglect the over-60 population. As a result, high-impact skills, ambitions and demands of an entire group are not being served efficiently, resulting in social exclusion, mental isolation, and reduction of life-satisfaction among people who have many more active years to be lived. [21] So it will be increasingly important to reframe the concept of ageing and the opportunities and purposes of the ageing population.

Three challenges for AgeTech entrepreneurs: how to build impactful solutions

Regardless of the different aspects AgeTech entrepreneurs are focusing on, there are three difficult challenges most of these start-ups will need to balance.

Building “must-haves”. While there are many great products out there, there is still an underserved potential for creating “must-have” solutions rather than “nice-to-have” products. Many companies do not dare to tackle big problems seniors are facing and there are still crucial and persisting challenges in core segments of the market waiting for the right company to solve them. We are excited to see what’s to come in the next couple of years.
Design is key. While elderly might increasingly own and purchase digital products often they fail to use them in the longer term. And in many cases, that’s because there is no input from older adults on their design. Without the consideration of the seniors, entrepreneurs who are often significantly younger run at risk to misunderstand needs and create mismatches between tech-solutions and consumer demands. Any solution or service created for seniors should thus be designed with the latter and their user behavior in mind.
Empowering rather than compensating. While the user experience should focus on the needs of an older generation, neither the purpose nor the marketing of the product should solely feed into the disabled elderly storyline. This point brings us back to the beginning of this article. The Silver Tsunami. A tsunami is a natural disaster representing nothing but detrimental destruction. The phrase, “Silver Tsunami” therefore feeds into an outdated view of ageing and if not challenged it will prevent us from seeing the opportunities being created by more active older generations.

In summary, well designed AgeTech solutions do not only hold the potential to substantially impact the lives of elderly, caregivers and families but they also might create the opportunity to steer a cultural shift as well as to change the narrative of ageing as a stage filled with purpose and opportunities rather than a time of physical deterioration. At Ananda Impact Ventures we are excited for this transformation ahead of us and the AgeTech innovations exceptional entrepreneurs will bring to market. As impact investors, we are always interested in mission-driven founders tackling today´s societal challenges — feel free to reach out if you´re one of them!

Written by Hannah Looks
Former Visiting Analyst @Ananda Impact Ventures

Sources

[1]https://www.age-platform.eu/special-briefing/first-eu-report-demographic-change-prompts-reflection-europes-ageing-population

[2] https://sifted.eu/articles/cera-elderlycare-agetech/

[3]https://www.age-platform.eu/special-briefing/first-eu-report-demographic-change-prompts-reflection-europes-ageing-population

[4]https://medium.com/@alexandrafoto/the-future-is-old-326deba37340

[5] https://www.aarp.org/politics-society/advocacy/info-2020/jenkins-age-tech.html

[6] https://sifted.eu/articles/cera-elderlycare-aget

[7]https://www.economist.com/graphic-detail/2019/08/14/americas-elderly-seem-more-screen-obsessed-than-the-young

[8] https://www.nature.com/articles/s41746-020-0306-7

[9] https://ec.europa.eu/info/sites/info/files/demography_report_2020.pdf

[10]https://www.thegerontechnologist.com/agetech-to-the-rescue-tech-solutions-for-older-adults-during-the-covid-19-pandemic/