Venture capitalist Mike Edelhart remembers a time when abortion was illegal across the U.S. He was in college, as was his sweetheart, who one day revealed to him that she was pregnant.
“I still think about it,” Edelhart says. His girlfriend told him she wasn’t prepared to have a child, and so the couple “sneaked” around until they finally found someone to perform the procedure. “Back then you would get routed to where you could get it done,” he says. “It’s a devastating emotional choice to make — and I’m a man.”
Edelhart knows from personal experience that abortion, as he puts it, can be a “horrible” thing to go through. But the 71-year-old managing partner of San Francisco-based Joyance Partners argues “that’s a different question from, as a medical procedure, should folks have the right to access it? Of course they should.”
Yet now that the U.S. Supreme Court has overturned the landmark 1973 Roe v. Wade decision that affirmed the constitutional right to abortion, women in 26 states where the procedure is banned or severely restricted are finding themselves facing the same dilemma that Edelhart and his girlfriend did decades ago. Headlines are ablaze with horror stories about near-death experiences by women with ectopic pregnancies unable to get an abortion and a raped 10-year-old traveling hundreds of miles to obtain one. Meanwhile, an underground railroad is bringing abortion pills from Mexico to Texas.
Behind the scenes, venture capitalists — including some big institutional names like Lone Pine Capital, Bank of America, Blackstone, and Silver Lake — are playing an important role in the abortion battle: financing telehealth companies that are stepping up to the plate to provide abortion access.
To be sure, most of the initial funding for some of the newest abortion providers is coming from small VC funds dedicated to women or social issues, like Edelhart’s Joyance Partners. It has backed Hey Jane, a small femtech startup — as women’s health startups are called — that aims to not only ensure more abortion services are easily available in the states where it is still legal, but to also help women who live in states where abortion is banned, as long as they travel to one where it is allowed. The procedure can be done within days, at home (or in a hotel), by taking two prescribed medications, with a virtual doctor visit.
New York-based Hey Jane is one of two new telehealth startups specifically focusing on these so-called medication abortions. The other is California-based Choix (pronounced “Choice,” the English translation of the French word “Choix”). Both provide a range of care around women’s reproductive health.
Hey Jane made a big splash when a $6 million Series A funding that closed in October was oversubscribed — a move that one investor called a “turning point” in the race to legitimize abortion care with funding dollars. Founded by three women — a former Uber executive, a doctor, and a marketing expert — the company opened its doors in 2019 and prescribes medication abortion in California, Colorado, Connecticut, Illinois, New Jersey, New Mexico, New York, and Washington. Hey Jane says it has already served 20,000 patients and has now raised about $10 million.
For Edelhart and the 16 other team members at his firm, the decision to invest in Hey Jane’s round was clinched by the Supreme Court’s Dobbs v. Jackson Women’s Health Organization ruling in June that women do not have a constitutional right to an abortion. (Hey Jane was named after the Jane Collective, a 1960s Chicago feminist group that helped women get abortions in the pre-Roe era.)
“When we first met the company, we hesitated a little bit,” Edelhart explains. “We felt that there were real risks involved in this.” Even before the momentous Dobbs decision, a number of states were already in the process of passing draconian anti-abortion laws. Texas, notably, has threatened to prosecute providers for “aiding and abetting” the illegal activity and hinted it might go out of state to find them.
But after the Dobbs decision, Edelhart says, “we decided it just didn’t matter. It was too important.”
Hey Jane “might wind up in the soup; we might wind up in the soup,” Edelhart says. “But it was really clear in our team — particularly the female members — we were just going to do it. We felt there was a real potential for this to become a valuable and important company because it could be the bridge between the past and whatever the future is.”
The future of abortion in the U.S. is anything but certain, and the current landscape is full of landmines. On the one hand, there is huge demand, and both scientific and regulatory changes have made do-it-at-home abortions safe, fast, private, and preferable for most women. While telehealth abortion providers say they are operating within the confines of current law, there is still uncertainty over future regulations and whether a company might incur massive legal costs defending itself down the road. Personal medical data is protected by privacy laws, but data privacy of patients remains another complicating issue for entrepreneurs.
These uncertainties may be scaring off some institutional investors, according to a dozen entrepreneurs, investors, and attorneys interviewed by Institutional Investor. Some asset owners even have specific clauses that forbid investing in women’s sexual health. These so-called vice clauses can also outlaw investing in areas like porn or tobacco, and can weirdly include women’s sexuality. “It’s crazy because they’re conflating everything to do with women’s health as being inappropriate and sexually explicit pornography,” says Bethany Corbin, senior counsel at Nixon Gwilt Law, who represents women’s health startups.
Some investors simply don’t want to be anywhere near the politically explosive issue. “Venture capitalists have said, ‘Oh, well, our LPs don’t necessarily support abortion, and therefore it’s going to be a no for us,’” says pharmacist Jessica Nouhavandi, co-founder of Honeybee Health, an online pharmacy that fills prescriptions for Choix, Hey Jane, and others in the 24 states where abortion is legal. She says that since the Dobbs decision, demand for abortion medications has exploded, now accounting for 50 percent of Honeybee Health’s prescriptions.
Headline risk alone can be a factor. “If an institution in Texas backs a VC fund that invests in an abortion access company, and then there’s a headline of ‘This Institutional Investor Is Backing an Abortion Access Company,’ there could be backlash,” says Carli Sapir, founding partner of Amboy Street Ventures, another investor in Hey Jane. “If it’s a university endowment, they might fear protests on campus regarding their endowment decisions.”
It doesn’t help that there’s been a slowdown in VC funding in the wake of this year’s market downturn. But even in better times, the money going toward women’s health startups was only a trickle. In 2021, funding for telehealth startups hit a record $18 billion, according to CB Insights. But according to a McKinsey report in February, femtech companies received only 3 percent of that funding, with “concentration in maternal health patient support, consumer menstrual products, gynecological devices, and solutions in fertility.” Abortion providers didn’t even garner a mention.
Part of the problem in obtaining funding is simple squeamishness about discussing female health issues among male VC practitioners, who dominate funding, says attorney Corbin.
For all the fundraising difficulties abortion providers are experiencing, it’s not all gloom and doom. Big institutional investors are behind some of the broader telehealth startups that now offer abortion services. Carbon Health, which raised $350 million last year and is now valued at a stunning $3 billion, offers a broad spectrum of virtual medical care — and has been outspoken in support of abortion rights.
The company, whose investors include names like BlackRock, Blackstone, Lux Capital, Silver Lake, Dragoneer Investment Group, and Two Sigma Ventures, began offering medication abortions in California last year. After the Dobbs decision came down, Carbon Health put out a statement on its website that read, “Reproductive care is healthcare, and reproductive rights are human rights.” The company said it plans to expand its abortion service to other states where abortion is legal.
Telehealth providers “want to be able to offer a solution,” says Deena Shakir, a partner at Lux Capital, which is an investor in Carbon Health and several women’s health startups, including Maven Clinic, the first unicorn among femtech companies. Shakir is a fierce advocate for abortion rights — and was so distraught when the Dobbs decision came out that she fell down a flight of stairs. “An abortion is not something that is nice to have,” Shakir says. “When you need to have it, it needs to happen quickly.”
It was actually the Covid-19 pandemic that opened the door for faster, cheaper access to abortion.
Taking a pill to induce an abortion, instead of having a doctor perform a surgical procedure known as a D&C, for dilation and curettage, has been legal since 2000. That year, the Food and Drug Administration approved two drugs — mifepristone and misoprostol — that are taken one to two days apart to terminate a pregnancy up to ten weeks’ gestation. But until the Covid pandemic, women were required to visit a doctor to obtain prescriptions for the drugs, which were then taken under a physician’s supervision. With the pandemic necessitating virtual doctor visits, the requirement was temporarily eliminated in 2020, and that became permanent last year.
Now, medication-based abortions account for more than half of abortions in the U.S., according to the Guttmacher Institute, a research and policy organization focused on sexual and reproductive rights.
The Dobbs decision has similarly pumped up demand for surgical abortion in states where the procedure is legal. “California is already experiencing a 3,000 percent increase in out-of-state care, and wait times for abortion services have increased significantly,” says Carolyn Witte, a former Google executive and the co-founder and CEO of women’s femtech startup Tia, based in San Francisco. “This isn’t just a problem for women in 20 states or so. This is a 50-state problem and one in which the answer lies in increasing total supply.”
Legal abortions fell by about 6 percent in the first two months after the end of Roe, according to a report by the Society of Family Planning. At the same time, the report found that 12,000 more abortions were conducted in states where the procedure remains legal. An American Medical Association study found that a significant number of women have been receiving abortion pills from abroad, largely through an organization called Aid Access that ships to states where abortion is illegal. (The states have no jurisdiction over foreign suppliers.) Together, these efforts have limited the decline in abortions to about 2,000 per month since April, The New York Times calculated.
“If every primary care provider like Tia in the state of California started providing medication abortion as standard of care like we’re doing, we could actually cover the supply gap for all 34 million women who’ve lost access across the country,” says Witte.
Last year, Tia raised $100 million in a Series B round headed by Lone Pine, the largest early-stage round for a company focused on women’s health. Tia has a post-financing valuation of $600 million. Tia also began offering telehealth medication abortions in California, with the full support of its board, which includes two of its investors. Lone Pine, when asked to comment for this story, provided a statement that reiterated a commitment to the company’s “full-service” platform for comprehensive women’s healthcare.
When it backed Tia, Lone Pine says, “We believed its care model would unlock better care for the largest and most underserved population of healthcare consumers in the U.S.: women.”
Historically, Witte says, the biggest hurdle to financing women’s health was the question of its total addressable market, or TAM.
“Women’s health was long considered a niche area because it doesn’t serve 50 percent of the population who are male,” she explains. Witte speculates that investors might erroneously view abortion in the same vein. “I think an investor might look at the abortion space as saying, ‘Okay, this is taboo, this is controversial. Are you cutting out half of America? Are you cutting your market in half by being in this space?’” But, she says, “I think increasingly people are realizing more than 70 percent of Americans support access to safe, legal abortion.”
The midterm elections confirmed widespread support, as voters in California, Michigan, and Vermont made abortion a constitutional right, while Kentucky and Montana voters rejected an amendment that would have made it illegal. The market isn’t small, either. According to Guttmacher, nearly one in four women in the U.S. will have an abortion by age 45.
“Yes, there is a loud minority, but it is a minority that is not reflective of the states in which this is legal to do so,” says Witte. “I do think the bubble has burst with respect to this being a taboo topic that investors won't touch, which is really positive.” She says the biggest factor that suggests that abortion is not only being normalized but also has mass market potential is corporate support for the procedure as an employee health issue.
“Employers are stepping up to start saying, ‘We’re going to actually pay for our employees to leave the state or reimburse them for travel for access to these services,’” Witte says.
If anything, according to Witte, the controversy necessitates investments to figure out creative ways of accessing abortion. “Restrictions and crisis unlock opportunity and innovation,” she explains. “When it comes to abortion, there’s both terrible things happening but also new opportunities due to advances in medication abortion, telemedicine laws, and a whole bunch of other things that create new opportunities. I think investors are looking for those.”
One creative twist by Choix is its offer to prescribe abortion medication before a woman is even pregnant. “In a time where our rights are being dismantled in real time, we wanted to be on the offensive and increase and expand access to care,” says co-founder and CEO Cindy Adam, who is also a licensed nurse practitioner and has specialized in abortion care for years, working for a time at Planned Parenthood. “We felt that it would really help to alleviate the stress and the barriers that come with accessing such a highly stigmatized and politicized form of care, even in states where it remains legal.”
Choix’s founders weren’t surprised when the Dobbs decision was leaked in early May. Nonetheless, Adam says when co-founder Lauren Dubey called to tell her the news, “I started crying. We both were.”
“It was one of those things where you knew it was coming, but to see it was even more painful,” she says.
Until the Supreme Court ruling, abortion was technically legal in all 50 states. But the last two years were some of the worst years for abortion care in this country, Adam says. “We saw more enactment of trap laws and other restrictions on abortion care than we’d seen since Roe. We saw the increasing restrictions. We saw this happening. And so that was one of the reasons why we decided to form Choix, because we wanted to be able to scale this quickly, offer care in as many states that we could legally do so to expand access to care.” (Choix now offers telehealth abortions in California, Colorado, Maine, New Mexico, and Virginia and hopes by next year to expand to every state where the procedure is legal.)
Because of the changes wrought by the pandemic, Adam says, “we were able to launch our services with the classic telehealth model of having your telehealth visit and then medications mailed to your door.” Choix also does a follow-up after the procedure is completed to make sure there are no problems.
To have a telehealth visit, women who live in states where abortion is illegal do have to travel to one where it’s legal, and prescriptions must be mailed to an address in that state, even if it’s a P.O. box. Choix recommends women stay for 72 hours to complete the process, as the second pill is taken up to 48 hours after the first one. (Choix has a sliding scale and works with abortion funds that also help defer expenses, like travel costs, for out-of-state patients.)
Funding has been challenging. But after bootstrapping its launch in 2020, Choix received a $1 million seed investment led by VC fund Elevate Capital in May, soon after the Dobbs decision leaked. The commitment was made beforehand, and Elevate did not back out. “We had a lovely email from them just saying, ‘We’re more committed than ever to working with you all,’” says Adam.
“For some investors, this could have been iffy because it’s not the same thing as maybe contraception where you can serve all 50 states, but they knew that going in and they knew the risks going in,” Adam says. Choix recently launched a separate crowdfunding campaign that closes in February.
“We were amazed by the timing of it,” Elevate founder Nitin Rai says of the Choix launch. “It validated how we were looking at things.” He says 75 percent of Elevate’s investments are with women founders. “People are resisting change, but the change is going to happen despite that resistance.”
Elevate’s limited partners include a few big institutions like Bank of America and the state of Oregon, where the VC firm is located. “We got no resistance from any of our institutional investors,” says Rai. But he says he was surprised and disappointed by the lack of institutional interest elsewhere. “The institutions did a lot of virtue signaling on social media, and I called out a few, saying, ‘Hey, if you’re supporting abortion care, you’re supporting women’s rights. Here’s a company, come join us and co-invest.’”
The response, he says, was “cold.”
Yes, there’s risk, he acknowledges. “But when is there certainty in the venture business? Why is it called ‘venture’? It’s risk money.”
The multiples on telehealth companies have been pretty rich, but Elevate has a more modest view. Instead of looking for one moonshot and expecting other investments to fail — as is the dominant VC model — he says, “We don’t chase the 10xers at all. If a 10x happens, it happens. But we’re happy with 3x to 5x in three to five years.
“I get passionate about it,” Rai says. “Take a risk. Without a risk, there’s no reward.”
For now, it’s still hard to calculate the risks.
“Laws are changing on an almost daily basis, definitely on a monthly basis,” says attorney Corbin, “and because it’s so politically charged, a lot of investors have expressed some concern about putting their money into the women’s health market right now, because they don’t know what’s going to happen and they can’t control what’s going to happen on the regulatory front and on the political front.”
Legal exposure for an LP, however, is probably not an issue. “We do have a couple of states, like Texas and Oklahoma, that have these aiding and abetting laws. If you’re investing in a company that is aiding and abetting abortion, could that potentially be traced back up to you?” Corbin asks.
“Let’s say that you’re offering a service where it’s legal, but you may be advertising for that service in a state like Texas, where it’s illegal, and that factored into somebody’s decision to cross the border to where it was legal and get your services,” Corbin says. “Then somebody could come after you and say, ‘Oh, you aided and abetted that person in crossing the border to get an abortion.’”
But she says unless an investor is on the board of the company, “the risk that it flows up to the investors in the company is smaller.”
That said, she believes that some states may overreach to see how far they can push the limits of that law. “Somebody’s going to get sued, which means they’re going to have the cost and the expense of defending against a lawsuit, at least up front, until it’s deemed to be frivolous or without merit.”
While all the VC-funded telemedicine providers say they will only prescribe medication abortions to women located in states where it is legal, it’s impossible for them to monitor the women’s physical movements — especially for the advance abortion pills being prescribed.
“We can only recommend that people receive and take the medications in the states where we are licensed to operate and licensed to provide care . . . in order to reduce the risk of criminalization for people seeking abortion where it’s illegal,” says Choix’s Adam.
It is currently not illegal to travel out of state for an abortion, and several companies have said they will pay for travel expenses for employees in states like Texas. Nonprofits are also footing the bill for those who can’t afford to travel. Yet there has been speculation that states like Texas will try to criminalize it or penalize companies that pay for such travel.
At least one startup could provide an end run around that possibility. Rachel Schneider, co-founder of Canary, says her startup offers financial technology to small companies wanting to set up emergency relief funds for employees. The company setting up the fund doesn’t ever have to know what the money is being used for.
“We’re grouping abortion-related travel in with other medical so that somebody doesn’t necessarily have to tell us what medical event they’re traveling for,” Schneider explains.
Such protections may not be necessary everywhere since abortion sanctuary states are moving to protect abortion providers and patients. California, New York, Connecticut, and Massachusetts have all passed versions of shield laws that prohibit the extradition of abortion providers whose patients are residents of states where abortion is illegal and traveled to get the abortion in a state where it is legal.
These laws may also include provisions that states won’t send a person’s health data back to their home state. “If somebody crosses the border, has an abortion, they’re not going to send that data back to the home state,” says attorney Corbin. “They won’t cooperate with the subpoenas unless it’s certified that it’s not an abortion-related crime.”
Some investors believe the laws protecting the privacy of medical information will protect companies from providing that information, but others are being more cautious. Abortion providers need to have “rock-solid data-protection policies in place,” says Naseem Sayani, co-founder of Emmeline Ventures and an investor in Hey Jane. Sayani says there’s still little clarity on what kind of data could be demanded from these organizations by states that have politicized points of view around abortion, which means “the entrepreneurs have to be ready for the worst.”
“They need to have their data-storage and data-purging processes figured out,” she says. “Once a prescription has been fulfilled, how quickly are they purging the personal data against that prescription so there’s nothing in there that can start to get weaponized based on whoever’s used the service?”
Adam says Choix follows privacy law guidelines, but they are “complicated and confusing” in some regards, echoing the concern that states that have criminalized abortion will try to subpoena out-of-state records. She says Choix would only submit the minimum records required in such instances because “we are only offering care in states where it is safe and legal to do so. We are not operating in the states where they have an active law criminalizing abortion care.”
“This is what we call abortion exceptionalism,” she says. “A business in California has to think about Texas law.”
For abortion practitioners, “everything is harder,” says Adam.
“Some people choose not to let us advertise or to work with us because we’re abortion providers. And so, for us, everything is that much more challenging.” But, she says, “it’s our hope that because of what’s happening, more people will step up and say that they want to invest because they felt that their risk would be not to invest in a company like this.”
Elevate’s Rai is among the investors in that camp.
“This is not picking stocks or being a late-stage investor, where you have profits and you are investing in some metrics. You are investing in untapped human potential,” Rai says. “This human potential is trying to solve some really difficult problems. How are they going to solve the problem if you don’t invest in it? If you solve the problem, imagine what kind of returns you can get.”