Roundtable: Investment in Age Tech
Jonathan Synett, CIO, NCL Technology Ventures
Dominic Endicott, Managing Partner, 4GEN Ventures
Keren Etkin, The Gerontechnologist
Moderator: Terry O’Dwyer, Chief Executive Officer, Longevity Leaders
TERRY: Let’s start with definitions. How would you define age tech? What are the sorts of platforms or technologies that you think might come under that banner?
DOMINIC: To me, Age Tech is the digital-enabled market opportunity from consumers over fifty (an arbitrary cut off I know). Today I would estimate that there is a 20 trillion dollar spend in this older demographic segment, and roughly 5 percent of that is digital. So, that gives us about a trillion dollar market opportunity in Age Tech.
A core theory within Age Tech is that digital will make itself accessible to people that today don’t access it. For example, Apple’s facial recognition technology opens up an experience for older people who might be less dexterous. It doesn’t have to be about ageing per se, it’s can be about how technology can make products and services accessible for everybody in society, in particular for older people.
JONATHAN: There are two ways of looking at it. A very simple definition would be it is technology which is targeting an elderly segment of the population. Within that, you could break it down into repurposed applications of existing technology to serve the elderly market; and new businesses which are specifically focused on elderly people. Some examples of the former might include voice recognition technology applications in small homes or assisted living accommodations. Examples of the latter might be sensors for cognitive decline or devices for improving hearing.
KEREN: I would broadly agree. It is also important that the technology has been designed with older adults in mind and that they have been included in that design process.
TERRY: Why are we talking about Age Tech now? Why do we see this as an important emerging asset class and why do we think people are starting to get a lot more interested in a lot more excited about it?
DOMINIC: There’s an emerging awareness of how much older people contribute to the economy as a group. Roughly three quarters of the wealth in the world is owned by people over 50, and the hold somewhere in the order of 40 to 50 percent of all disposable income. They are an interesting consumer class that has to date been somewhat ignored. If you look at most venture backed companies targeting consumers, fewer than 1 percent of VC dollars are going into this class - and yet the opportunity is staggering.
We are also starting to see some big exits which have raised awareness and interest in the segment. Pill Pack, for example. Babylon Health is another. The exists are bringing awareness about the segment’s potential and people are starting to think that maybe this could be the next big thing.
JONATHAN: I agree it’s becoming increasingly important. Although, I would argue it is not quite mainstream yet.
Everyone knows that this is a wealthy segment, and a growing segment. It’s also a segment which is becoming much more comfortable with technology. Everyone likes to say how their grandma is on Facebook now, for example.
On a societal level, elderly populations are having a massive impact on the healthcare system and on the cost of healthcare. I think it’s very important for technology to come in and try and solve some of these problems, to try to improve quality of life and to reduce the burden on the healthcare system.
It is also not just about health and well-being, but also things like education and financial wellness. There are lot of people approaching their 50s and 60s who are going to live longer than they thought. It’s important from a societal point of view that the poorer demographic of this ageing population is properly prepared. Otherwise, it has the potential to make certain aspects of a society unsustainable.
TERRY: What do we think will be the successful emerging technologies in this category? Have you come across any particularly exciting products or services?
KEREN: I see entrepreneurs starting to develop a more holistic view of the ageing population. Five or ten years ago, there was a perception that older people only need health services. That is now evolving to encompass areas like housing, social, communication and finance. As entrepreneurs start to become caregivers to their own parents, you start to see initiatives for family caregivers who are overburdened and overstressed. Once they start to look for tech solutions for themselves or for their parents, they see that there is a huge gap – and therefore opportunity
TERRY: What are the disruptors on the care tech side of the equation?
DOMINIC: You have the care recipients, you have the care givers and then the care employees, all under a huge amount of stress. For example, care employees often having to go from job to job. Commuting may be an issue and they’re often not able to spend sufficient time with their care recipients. Scheduling software and computer models that are rethinking at a fundamental level how to optimise deployment of care employees can have a real impact here.
It’s important to point out that even though we talk about tech, I would argue that the human side is just as, if not, more critical. In practice that means, how do you enable people to be more efficient by making use of the available technology?
JONATHAN: One area I could highlight, and where we’ve seen a lot of companies emerge in the last few years, is home monitoring. These are technologies or tools that offer support to both the patient and the caregiver by creating an environment of reduced stress. It’s a growing market and a tremendous amount of innovation is emerging.
TERRY: Care tech is of course only one vertical in Age Tech. Which do you think is the most exciting or most fruitful area for innovation right now?
DOMINIC: We’ve looked at the U.K. market and identified roughly five hundred companies in Age Tech. Roughly half of them are in health or care. So clearly, right now, that’s where you see the most activity. But it’s not clear that many of them have really cracked a business model that feels scalable. There are other underdeveloped areas that offer massive opportunities such as work, learning, training and skills development.
KEREN: There’s a huge opportunity for work. People don’t necessarily want to keep working full time. They don’t necessarily want to keep working in the same workplace. Some of them want to start their own business in their 60s or 70s. Workplaces will need to adapt to an ageing demographic as well.
Learning is going to have a huge part to play in this. New places where older adults can acquire education, retrain or reskill will emerge. New types of employment will become increasingly important. For example, we have the gig economy, which usually is targeted toward younger people. In fact, this type of work could elicit a lot of older adults who want to work on their own terms for some extra income.
DOMINIC: Another field would be food and nutrition. A really interesting start-up ecosystem that has emerged here, including cloud kitchens and farm-to-table delivery. These are currently catering for the Gen X’s but could pivot into an ageing demographic as a next-generation version of Meals on Wheels.
KEREN: I also think that the built environment will come into focus. The whole topic of age friendly cities is exciting and important. Age Tech will play a huge role in the ability of more people to age well in society and in the community, especially in Europe. We need to make public spaces safer for people who walk slowly, for example. Cities and urban environments will also need to create spaces that encourage social interactions, because we know that as people grow older, unfortunately they have fewer options to be social with other people in their day-to-day life.
DOMINIC: We see the built environment as a monster opportunity, especially in the context of the home. We see a massive opportunity associated with “elegant downsizing” and rethinking the home, the house, the block, the neighbourhood and ultimately the city. This gets even more interesting when we associate it with the carbon neutral movement. The optimal city will be good for 80-year olds and 8 year olds. Trillions of dollars that should largely go into funding these age friendly cities. It will take a little while to get going, but it will it will actually outweigh everything else.
TERRY: What is standing in the way of developing these obviously very important and necessary innovations?
DOMINIC: Mindset at a macro level. Ageism is prevalent, particularly in the tech world. We need a fundamental shift in how we think and develop new models in the context of longevity.
JONATHAN: I don’t think there are enough entrepreneurs, business owners and investors who cater to an ageing demographic. The tech industry is young, and they develop businesses for young people. And that is a a big problem. An attitudinal shift is required.
The other major obstacle holding Age Tech back is the question of business models. Specifically, within health and social care where the business models are broken in many ways. The payer model in healthcare makes it challenging to roll out technologies.
TERRY: When do you expect to see Age Tech really come into its own?
JONATHAN: I don’t think the penny is going to drop in the next twelve months or so unfortunately. There are huge societal issues that need to be sorted out before Age Tech really takes off. But we’re certainly not far away.
KEREN: My sense from entrepreneurs in this space is that fund raising is extremely difficult because, as you know, most VCs don’t really have domain expertise on this. However, I think that the penny is going to drop with the investor community quite soon, perhaps in the next twenty-four to thirty-six months.
TERRY: Let’s do some crystal ball gazing. Tell me, what do you think we can expect to see in the world of Age Tech investment in the next five years?
DOMINIC: We estimate that today Age Tech is worth roughly ten billion a year globally.
We think that’s going to grow to one hundred billion between now and roughly 2025. Where that’s going to happen is a really interesting question. I would argue that actually Europe has a huge opportunity, I think it’s a natural home for Age Tech. But I think the U.S. and China, when they wake up, will move a lot faster.
JONATHAN: I think Age Tech will become mainstream within the next few years. You’ll have funds that are specifically focused on aged tech and aged care. I think we’ll see more and more dedicated programmes and accelerators emerge in the next few years.
KEREN: I think we’re going to see more of what we’ve seen in the past two years, which is at Amazon and Apple and sometimes Google dipping into this market and not only with investments, but also with acquisitions. I think we’re also going to see a lot of big corporates trying to win back Baby Boomers as primary customers. We’re going to see a lot more corporate venture arms trying to dip into this market.
Companies that sell products and services that are respectful of older adults, include them in the design process and make them feel like their opinions and needs matter will emerge successful. And the companies with the smartest marketing strategies that think deeply about the elder demographic market will win big.
This article is an extract from the Longevity Trends 2020 report.
The report captures Longevity Leaders' extensive research into this space, including the most important longevity trends of 2020 that businesses, policy makers, scientists and the general population need to be aware of.
You can download a free copy here