Fertility Inc.: Inside the big business of babymaking
Sperm and eggs have invaded the Pennsylvania Convention Center.
At one end of the hall, a giant sperm poised to fertilize an ovum the size of a small weather balloon rotates above a booth marketing egg banking services. Nearby, an enormous mobile composed of more sperm and eggs—this time wearing eerie human faces—grins down from the rafters. Another booth is handing out stress balls with unmissable squiggly tails, while attendees crowd around an arcade game for the chance to win T-shirts stashed inside—what else?—golden eggs.
Granted, there’s only so much iconography the fertility world has to draw on, but the sheer volume of genetic material floating around the convention center is a sign that the industry, once considered niche and boutique, is ready to go mass market.
It was mid-October, and the 8,000 doctors, nurses, bloggers, investors, and health care executives milling about the exhibit hall had descended on Philadelphia for the American Society for Reproductive Medicine’s annual confab—what one industry executive described as the “Super Bowl of fertility conferences.” They attended seminars on topics like the trauma of infertility and team building in the embryology lab. They chatted and exchanged business cards with exhibitors touting services ranging from at-home sperm testing to surrogacy agencies.
On the first afternoon, the crowd shuffled into the ballroom for one of the keynotes, which focused not on any major scientific development but rather on “IVF as a Business.” The talk was given by David Sable, who runs a health care–focused investment fund. “It’s not a bad time to think big,” Sable told the audience, laying out his vision for how the industry must embrace entrepreneurship to help in vitro fertilization—the medical process in which a woman’s eggs are harvested and fertilized, and a resulting embryo is implanted in her uterus—reach its full potential. He ended with a call to action: “We are, I think, at a pivot point in terms of IVF as a business. We’re not really thinking about these enormous new patient populations that are coming into our arena. We need to start planning for the future.”
Sable first attended the ASRM conference in 1988 as a resident about to embark on his training as a fertility doctor—just 10 years after the birth of the first IVF baby. In the decades since, the sector has gone from living outside the traditional health care system, viewed almost as a luxury good, to a serious industry garnering serious money. Piper Sandler research puts the U.S. fertility market at $15.4 billion by 2023, up from almost $7 billion in 2017. Millennials, now the primary demographic having babies, are aging into fertility treatment and are set to reshape the space in the same ways they’ve transformed so many other parts of our economy.
Investors have taken notice, funneling $646 million into the sector in 2018, according to PitchBook. “Real dollars are starting to flow into this category,” says Stephanie Palmeri, a partner with VC firm Uncork Capital. The past few years have seen the launch of businesses encompassing everything from simple ovulation trackers to research plays attempting to discover links between genetics and reproductive disorders. Private equity firms, drawn to the industry’s high margins and increased success rates, are rolling up fragmented mom-and-pop fertility clinics. In October, fertility benefits provider Progyny became one of the first startups in the industry to go public; its stock is up more than 150% since the IPO.
Meanwhile, the high price tag for patients—the average IVF baby costs $40,000 to $60,000, which comes out of pocket for most people—has allowed founders and investors to frame their work as democratizing treatment and improving access, all while positioning themselves to make a lot of money doing it. “Some people really care about having genetic children, which both makes it a huge source of suffering—and a huge market,” says Hank Greely, a professor focusing on bioethics at Stanford Law School.
The driving force behind the sector’s growth is the increasing age at which women are having their first child—age being one of the few factors in the under-researched field that doctors are certain affects a couple’s ability to conceive. In the U.S., women in their early thirties are now more likely to give birth than women in their twenties, and the only cohorts that saw increased fertility rates in 2018 were women in their late thirties and early forties. “I used to go to investors and say sex is great but not for making babies in your thirties and forties, and I think people are realizing that,” says Martin Varsavsky, a serial tech entrepreneur who has founded two fertility startups. “We have to let women have their babies later.” With increasing life expectancy, “is it fair to say you can only have babies until you’re 35? The window is so narrow,” he adds. Society at large is starting to recognize that there’s nothing fringe about fretting over or treating infertility. According to Progyny, one in eight couples suffers from infertility, making it more common than asthma or diabetes. By some estimates, IVF babies will account for just over 1% of the global population by the turn of the century, up from about 0.1% today. Many of those children won’t be born to parents diagnosed with infertility, but rather to nontraditional families, such as the LGBTQ+ population and single parents, who rely on the same technology.
For all its momentum, the modern fertility industry remains a relative newborn. That freshness is part of its potential, but also its risk. There are medical insiders who say it’s still the Wild West of medicine, under-regulated and commercially driven, with certain players overpromising what treatment can do. While some cheer the sector’s focus on women’s health, others say it has reinforced stereotypes that equate women’s worth with their ability to reproduce. And it is women whom the industry targets: Despite the fact that men cause or contribute to infertility in about half of cases, companies have only recently turned their attention to male partners. There’s no denying that fertility is emotionally complicated in ways most other areas of the health care system are not. “There’s little we care about more than our children, which makes this a particularly fraught and charged area,” says Greely. “The stakes are just higher when you play for babies.”
A few weeks after the ASRM conference, I visit Sable at his office in Midtown Manhattan. The 26th-floor conference room offers sweeping views of New York City, the fertility capital of the U.S. The metropolis is a microcosm of some of the sector’s key drivers—high incomes, the rising age of first-time parents. More IVF is done here than anywhere else in the country.
Sable’s past as a reproductive endocrinologist (medical speak for fertility doctor) means he’s unfazed by the recorder sitting between us on the conference room table—a hazard of his old job. “Patients used to come in and record,” he explains. “No one is more knowledgeable or motivated as a patient than an IVF patient.” That drive is unusual in health care and makes the sector appealing to investors. “Most of the time, people are avoiding care,” explains Sara Deshpande, a partner at Maven Ventures, which has invested in the fertility space. “They don’t think actions will really improve lives.” No one is running off to get fitted for orthotics or have that mole removed with the same desperation that couples launch into treatment for infertility.
In 2004, Sable took a sabbatical from practicing. Soon after, he was recruited by Special Situations Funds, an investment firm, to launch a health care fund. He kept up with what was happening in the fertility world, but for a long time, there wasn’t much to see. Science and outcomes were improving, he says, but the sector was “not transforming.”
It was a decade before Sable saw his old field start to change. In 2012, ASRM declared egg-freezing no longer experimental. In the years that followed, private equity began to up its investment in the industry and an ever-tightening labor market prompted more employers to implement fertility benefits to retain talent. A third of U.S. states now mandate some form of infertility coverage—most recently New York, which as of Jan. 1 requires that fully insured employers with more than 100 employees cover three rounds of IVF. Sable, sensing a sea change, launched an IVF-only venture fund in 2018.
Right now, women in the U.S. undergo nearly 300,000 treatment cycles of IVF annually. But that figure could eventually grow to something closer to 1.1 million by Sable’s calculations. (A cycle refers to the process of egg extraction and fertilization, followed by embryo implantation; it takes the average woman 2.2 cycles to get pregnant.) His estimate takes into account the 7 million people struggling with infertility, many of whom don’t seek care because of the expense. It also includes LGBTQ+ people who rely on assisted-reproductive technology to build their families, cancer patients who want to preserve their fertility as they undergo treatment, and carriers of devastating genetic diseases who could use IVF to select for embryos without, say, cystic fibrosis.
About 2% of U.S. babies are born via IVF—one of the lowest rates in the Western world. Increasing cycles to 1.1 million would put the U.S. more on par with Denmark, where that figure is approaching 10%. The difference? In Denmark, treatment is paid for by the state, while care in the U.S. has typically been out of pocket. “It’s a messy consumer marketplace. If you can afford to write a check for $20,000 every few months, it’s great care,” Sable says. “What hasn’t improved is access.” There are just 450 fertility clinics in the U.S., and a handful of states have none at all. Sable says more efficiency and automation could bring down costs, but that’s never been a priority for such a small market.
A prime example is the antiquated technology used to store frozen embryos and eggs. Historically, many embryologists started out in animal husbandry, and they brought their storage system with them when they began working with human embryos: glorified farm tanks full of liquid nitrogen, sometimes labeled by hand.
One of Sable’s portfolio companies, TMRW, is attempting to bring that system into the 21st century with robotic cryostorage. Better freezing technology for eggs and embryos has resulted in a spike in usage, leaving the old infrastructure struggling to keep up. TMRW estimates that the number of U.S. patients storing eggs or embryos ballooned from 17,000 in 2005 to nearly 700,000 in 2017. By 2025, the company expects that number to hit 2.6 million.
Sable’s fertility-focused fund backed the startup as one of its first investments, leading its $12 million Series A round in May. TMRW’s automated system for storing and tracking is designed to prevent the kinds of tank failures that in 2018 resulted in the loss of 4,000 eggs and embryos at a Cleveland clinic, and eliminate mixups that have led doctors to implant the wrong embryos. “It’s a service business,” says founder and co-CEO Joshua Abram, “that’s moving from artisanal practices into a standardized regime.”
One of the more shocking aspects of fertility is how little most of us know about it—a holdover from a health system that traditionally focused on educating women about avoiding pregnancy. One founder in the space told me that she has to give what amounts to a basic biology lesson at the beginning of every pitch so investors can keep up. Attempts to bring potential customers up to speed have therefore become a requirement for most startups, but it can lead to an uncomfortable muddling of education and marketing.
One night last November, New York–based startup Kindbody was attempting to tread that line. Kindbody bills itself as a women’s health network, but it’s primarily known for egg freezing, a topic that’s clearly of interest to the 50 women and two men who have gathered at its Flatiron location for an event billed as Fertility 101. The space’s aesthetic—modern and spa-like—shares more in common with the Drybar salon around the corner than it does with a typical doctor’s office (“Health care doesn’t have to be ugly,” notes founder and CEO Gina Bartasi). Fahimeh Sasan, Kindbody’s founding physician, standing next to a wall mural instructing visitors to “own your future,” told attendees to grab a glass of Prosecco, get some cheese, and relax.
Sasan got down to business. “The first point before any conversations about IVF or talking about getting someone pregnant or preserving fertility is just understanding the basics,” she told the crowd. “Unfortunately, no one teaches us the basics. We go to Google, and Google freaks us out.” Sasan got some knowing laughs before diving into such a comprehensive overview of fertility and egg-freezing that it was jarring when she finally made her pitch: Attendees who signed up that night for a fertility assessment would get $100 off and a $500 reduction in their $6,500 bill for egg freezing—a figure that does not include medication or storage. So many women lined up for promo codes at the end of the evening that getting out the door was a struggle.
After the talk, attendees asked Sasan about everything from pregnancy loss to needle phobia. One woman’s question, though, hinted at a more fundamental worry about the industry: “Not to be negative, but what if you freeze your eggs with a company and that company goes bankrupt or out of business?”
Her concern was well-founded. Two weeks earlier, Trellis, a boutique egg-freezing-only studio a three-minute walk up Fifth Avenue, had sent out an email alerting customers that it was shutting down. Private equity–backed fertility-clinic network IntegraMed had launched Trellis based on the idea that women who freeze their eggs are vastly different from those seeking treatment for infertility and should receive specifically tailored care in their own separate space. “These are people coming in to be empowered,” Pam Schumann, who was the chief development officer at Trellis, had said when I visited the clinic last spring.
The studio had been open less than a year, and Schumann told me that no clients had yet come back to use their frozen eggs. “It’s a little bit of a dilemma in the space,” she said. Trellis’s parent company, IntegraMed, declined requests for an interview but in an email said that “enrollment numbers were not sufficient to keep pace with the rising cost of doing business in New York City as a stand-alone operation.” (Eggs frozen at Trellis are being stored at one of the fertility clinics in IntegraMed’s network.) The explanation tracks with national trends: Egg freezing is fast-growing—but off a very low base. In 2017, the most recent data available, women underwent nearly 11,000 egg-freezing cycles, up from 475 in 2009. Sector wide, 90% of frozen eggs have not been used, and industry experts say the field is too new to say anything conclusive about success rates. “There’s a lot of nuance to egg freezing, and what scares me right now is a lot of people think it’s as easy as 1-2-3,” says Brian Levine, founding partner and practice director of fertility clinic CCRM-New York. “Women are being oversold and don’t even know what the metric of success is.”
The debate over egg freezing hints at a more philosophical intra-industry fight. On one side are companies like Kindbody and now-defunct Trellis, with their language of empowerment and go-girl inspirational wall art. These founders want to rebrand fertility issues from a problem to be treated to an opportunity to be grasped. “A lot of startups are saying, We are not infertility clinics,” says Lucy van de Wiel, who works in the reproductive sociology research group at the University of Cambridge. “We are fertility clinics where you can come to manage your fertility.” On the other pole are those who argue that procedures related to fertility should be considered serious medical undertakings. Both sides have an economic interest in how egg freezing—and fertility more broadly—is ultimately framed. It wasn’t until 2009 that the World Health Organization designated infertility a disease and not until 2017 that the American Medical Association followed. Before that, treatment was considered a consumer good, says Tammy Sun, cofounder and CEO of Carrot Fertility, a fertility benefits provider for employers. The change in status helped legitimize the field and the increase in insurance coverage that followed.
But in their own way, companies like Carrot are also seeking to expand fertility treatment beyond women with an infertility diagnosis, which has traditionally been a prerequisite for insurance coverage. Their targets: the LGBTQ+ population and people choosing to have a baby on their own, groups that suffer from what’s termed “social infertility,” or the inability to have children for reasons that extend beyond biology. Now, inclusive companies are increasingly covering their treatment too. “The opportunity is much bigger than what we had previously assumed,” says Sun. “Fast-forward another five years, and this will be table stakes.”
The average person should be forgiven for not knowing much about fertility—science doesn’t know much either. The egg is the largest cell in the body, but it’s arguably the least researched. One reason: the culture wars. The government has no interest in funding research that could involve discarding human embryos. “I’ve been living in that ethical can of worms for 30 years,” says Sable. “When we started reproductive genetics, I started getting hate mail.” Research backed by the private sector is happening, but it can skew the types of studies that get tackled. To attract funding, projects must be based on a potential business application rather than on pure scientific curiosity or an interest in improving the life of womankind—a state of affairs some see as hampering innovation. “I don’t think we’ve seen the dollars flow into technology that improves birth rates or dramatically lowers costs,” says Jake Anderson-Bialis, cofounder of industry tracker FertilityIQ. A lot of startups are simply repackaging a test or redecorating a waiting room, he says. For example, menstrual-tracking apps, though buzzy, mimic what women have been doing on their paper calendars for decades. “The most potent weapon we have is IVF,” Anderson-Bialis says, “and it works 20% to 30% of the time.”
The lack of resources has relegated fertility to what Sable calls a “know-it-when-I-see-it level of thinking.” Consider the industry definition of infertility: the inability to have a child after six months of trying for women over the age of 35, or one year for those under 35. The cause cannot definitively be diagnosed by anything as straightforward as a blood test. Indeed, a third of the time, it’s simply chalked up to “unexplained infertility.”
Many of the startup founders in the field launched their companies after receiving similarly ambiguous answers about their own reproductive health. When Afton Vechery requested a baseline fertility assessment, her doctor told her to simply wait and see if she had issues once she was ready to have a baby. Vechery decided to pursue the testing herself. She ended up with a diagnosis of polycystic ovary syndrome, a hormonal disorder that can cause infertility, and a $1,500 bill—an experience that led her to cofound Modern Fertility. “I felt like the entire conversation about fertility today was very reactive as opposed to proactive,” she says. The San Francisco–based startup lets customers take the same hormone test at home that’s typically done in a fertility clinic, but for $159.
The test isn’t without controversy. One of the things it measures is anti-Müllerian hormone (AMH), which can be useful for women looking to evaluate how their ovarian reserve is changing, but doctors worry that taking the test only once—and without the counsel of a physician—fails to provide a clear picture of the taker’s fertility and can cause undue alarm. Modern Fertility says AMH, while not a perfect predictor of fertility, remains the best known marker of ovarian reserve, and it recommends users track the hormone over time. What’s more, Vechery says that the anonymized data the company is collecting from customers who opt in will be used in clinical research that could result in better predictors of future fertility.
Despite doctors’ misgivings, there’s a reason women are seeking out at-home tests and other nontraditional ways of addressing fertility. “Navigating the medical system as a female is fraught,” says NextGen Jane CEO and cofounder Ridhi Tariyal, pointing to studies showing that it takes longer for women’s pain to be acknowledged and treated in emergency room settings. “There’s some mistrust there.” Tariyal’s startup collects tampons from women who have endometriosis in order to analyze their menstrual blood and provide insight into the underpinnings of the painful disorder.
When Tariyal was trying to raise funding for NextGen Jane—challenging enough considering she was pitching period blood—she realized she got more interest from investors when she highlighted endometriosis’s impact on fertility rather than just the ways it was affecting the quality of women’s lives. “It sends the message that your greatest value is your ability to reproduce,” she says. She worries that the growing investor focus on pregnancy and fertility will draw away what little attention the rest of the women’s health field has struggled to garner—including issues such as the maternal mortality rates of black women, which are truly dire and mostly ignored.
It’s a reminder that the fertility industry has yet to disentangle itself from the very paradigms that advancements in reproductive health were supposed to dismantle: the conflation of womanhood and motherhood, the belief that biological ties are the best way to create a family, the implication that the burden of reproduction lies with women. It remains unclear that any amount of investment could ever shift those archetypes. But for the industry overall, that would truly be a major breakthrough.
The baby business grows up
For many, it takes a village to conceive a child. There’s more to the fertility sector than IVF.
At-home testing: Modern Fertility
The provider of hormone fertility tests was founded in 2017 and has raised a total of $22 million. Investors include Forerunner Ventures, which has backed hot consumer startups like Glossier.
Known as the “Fitbit of fertility,” Ava’s bracelet tracks factors including skin temperature, pulse, and heart rate to help determine a woman’s fertile window. Founded in 2014, the company says its technology is responsible for 30,000 pregnancies.
A fertility benefits provider for employers, Progyny raised nearly $100 million in venture capital from the likes of Kleiner Perkins, TPG, and Merck Ventures before going public in October. The company is profitable and has a market cap approaching $3 billion.
Diagnostics: NextGen Jane
The maker of a smart tampon is researching reproductive disorders like endometriosis by analyzing cells that are shed during menstruation. Founded in 2014, the startup raised a $9 million Series A last year.
Egg freezing: Extend Fertility
The New York City–based clinic claims to be the largest egg-freezing practice in the nation. Last year it raised $15 million from private equity firm Regal Healthcare Capital Partners to expand into other services like IVF.
A version of this article appears in the February 2020 issue of Fortune with the headline “Fertility Inc.”
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