AgeTech Accelerator’s Lorraine Morley on market disconnect, helping investors take the plunge and shaping the AgeTech market.
Continuing our series of interviews with our Advisory Panel members, we spoke to Dr Lorraine Morley who helps innovators overcome barriers to access markets. Dr Morley is the UK Lead / Advisor for AgeTech Accelerator which provides free business support to innovators with products and services for the emerging silver economy.
Longevity.Technology: AgeTech is a sector that is growing, both in terms of R&D and investor interest. We started off by asking Dr Morley what she was involved with at the moment.
Lorraine Morley: Two key areas of my work are around the design and development of the ‘smart caring home’ and also how to create new financial models which will help accelerate and open up the AgeTech market for both organisations such as local authorities and for consumers. These new financial models incorporate new forms of loans and credit facilities either for the consumer or the local authority based on ability to pay.
One of the barriers to mainstreaming the market for goods and services which support healthy aging and later-life living is establishing trust in products and getting the price points right in a market that is breaking new ground. And this stands true for both the B2C and B2B market. I think that if we can establish the products in the B2B market first then the consumer market will naturally follow; we are helping to do this by finding ways to de-risk the commissioning, testing and piloting of products and through creating new financing models.
One of the most interesting parts of our work has been creating packages of products that offer either partial or full solutions to major aging challenges, as this is appealing to B2B customers, particularly local authorities, care home groups and retirement community developers. The packaged solutions take several forms, including those which have products that work together to amplify a positive effect, for example, 2 or 3 products which, when used together, ensure that someone does not become dehydrated, or the package might have a stage-gate design where products are introduced systematically, each one building on the benefits of the one before.
“We have a database of just over 1200 of some of the most innovative AgeTech and healthy aging products in the world and it has been a fascinating job using that intelligence to help understand, shape and form the AgeTech market.”
An example here might be where someone is learning to use digital products or technologies to help self-assess and track medical conditions and well-being. We have a database of just over 1200 of some of the most innovative AgeTech and healthy aging products in the world and it has been a fascinating job using that intelligence to help understand, shape and form the agetech market.
We have also introduced the idea to [UK] Government and impact investors of ‘buddy-up investing’ where a commercial product for later life living is buddied up with a social impact product to amplify the positive outcomes for both the businesses and for the investor. We are putting buddy-up pitches together for an investor event we are running with Silicon Valley Bank in November.
Longevity.Technology: Are there any areas of the sector you feel aren’t getting sufficient exposure at this time?
Lorraine Morley: I don’t think many people have really considered what life will be like when they get older. Aging is a problem that is going to affect all of us, but for the upcoming generations, it’s likely to happen without the safety net of funded social and community care which is reducing in nearly all countries.
In the last few years, there has been a big focus on developing products for certain areas of need. Most of these new products have come out of startups, use a digital platform and require a ‘smart’ technology to use them. Areas of oversupply, based on research I recently conducted, are around ways to keep in touch, how to manage early signs of dementia and how to track general well-being. Whilst these are important considerations, it is the more practical and less advertising-friendly issues which ultimately take away someone’s independence and force the decision to either move into a care home or to bring in paid for home-care. These areas include things like loss of sight or hearing, loss of continence, loss of the ability to feed oneself or extreme dehydration.
Dental hygiene in the very old is a very big problem. Yet, we are seeing far fewer examples of innovations in these areas. Ultimately a good old age is being able to maintain dignity and self-respect and to maintain one’s social, personal and financial independence for as long as one might want. I would really like to see some more specific thematic innovation programmes to help tackle these areas.
Longevity.Technology: Where else could the sector improve?
Lorraine Morley: We also need to consider the issue of genderised products. Whilst the needs of males and females as they age are sometimes similar, often they are different. Gender bias is a general problem in product design where the default human is seen as male. Yet, in nearly all populations throughout the world there are substantially more older women than men. Is should not be a surprise, then, that few of the most innovative products are being readily adopted by older women, if they have been designed mostly by men, for men. More and better testing of products at the earlier stage of their development is highly recommended, with test cohorts reflecting the proportional difference between the numbers of women and men within the market segment the product is targeting.
“… Millennials and GenZ remain largely ignorant of what lies ahead … we have a moral responsibility to help them instil healthy aging behaviours before chronic conditions kick in and they outlive their savings.”
Longevity.Technology: What about the other end of the age spectrum?
Lorraine Morley: Incorporating healthy aging into the school curriculum is a must as is providing specialised higher education courses on Longevity and healthy aging. Most of us working in AgeTech and/or Longevity have heard of the concept and the emerging reality of the 100-year life. Yet those who will have to contend with this, that is Millennials and GenZ, remain largely ignorant of what lies ahead. I think that with the guaranteed reduction of support in later life that these young people will experience, we have a moral responsibility to help them instil healthy aging behaviours before chronic conditions kick in and they outlive their savings.
Longevity.Technology: Thinking about investment… AgeTech is growing, so are investors better informed, or is there education that is still necessary?
Lorraine Morley: AgeTech is a subset of Longevity tech and one of the key difficulties for investors is that it is a broad term which incorporates high-tech, low-tech and no-tech goods and services.
But at its heart is a focus on technologies, products and services which empower people – helping make their lives easier and enabling them to choose how they live as they age. This includes products and solutions to help people live independently in their own homes for as long as they want to, to stay healthy, to protect their wellbeing, to stay connected and more. If someone knows where to look (but not knowing where to look is part of the market disconnect) they will find any number of products or services to help them. But, as I mentioned earlier, products on their own often don’t have enough impact, and so they are best used in conjunction with other products. This adds to the complexity for potential buyers as well as investors.
Some areas of AgeTech are easier for investors to assess in terms of potential opportunity, risk and return and we have seen significant investment into virtual healthcare, for example. Wellbeing tracking and medication adherence products have also been attractive investments. Home care delivery and care-matching platforms have about matured in terms of investment potential and are both still considered to be tough models.
But other areas are finding less investment and that is because it is more difficult to measure the potential impact and/or to devise a sustainable business model. Areas which are not currently receiving enough investment include products for falls prevention, sense assist, eating and drinking, education and learning, personal hygiene and personal finance. Well-designed products in these areas could find a ready market.
“… the market needs funds to help accelerate the pipeline of supply and to support scaling up.”
There is evidence that more investors are becoming interested in the AgeTech market but need to understand it better before they will deploy funds and there is a sense that it is still considered too risky as in the UK particularly there remains few significant exits. But the market needs funds to help accelerate the pipeline of supply and to support scaling up. So, we are slightly in a chicken-and-egg situation. We hope our buddy-up investing model mentioned earlier will go some way to helping investors take the plunge and to overcome one of the barriers to market development.
Longevity.Technology: Most investors appear to prefer seed-to-early-stage investing, have you found this to be case in your networks?
Lorraine Morley: In AgeTech investment we see a mix of preferences from investors and some key asks from investees. Traditional investors mostly look at seed to early-stage opportunities, with businesses having some revenue and traction in the market. There are those, however, that have a scale-up focus and will offer follow-on investment.
There are not enough early-stage social impact investors who can offer patient, long term capital without demanding the same return or expectations that traditional investment requires. This is considered partly due to a lack of clear definition of social impact investment, how to frame it and measure it in the context of healthy aging.
A recent focus group I took part in which was commissioned by UKRI proposed two categories: 1) commercial investments with a social impact and 2) social investments which may or may not have a commercial return (but which shouldn’t destroy capital either), though this second category is considered much more difficult to align with investor expectations as valuing non-financial outcomes remains difficult and as the report suggests, requires specific strategies, models and capabilities from investors.
The big gap identified in the focus group was investment to support early-stage innovation with a sweet spot for entrepreneurs of £50k – £750k.
There is a strong argument for long-term opportunity, as there just needs to be more. Of everything! No real dominant brands have emerged so there is everything to play for. As the market matures and becomes better understood I think we will see investors having the confidence to invest larger amounts of money enabling businesses to scale and target cross-border and international AgeTech markets.