Unlocking the Potential of the European AgeTech Market
Guest article written by Dirk Schyvinck, Program Manager Aging&Longevity at Birdhouse
Since we launched the Birdhouse Aging&Longevity accelerator program aimed at European startups in late 2021, we have seen the rapid evolution of the European ecosystem. One of those evolutions is the breakthrough of AgeTech.
Admittedly, the term Silver Economy to refer to the entirety of economic activity(ies) of the 65+ market, has existed for some time. AgeTech is a relatively new term that we have only seen emerge in various countries for about two years. At the Birdhouse, we strongly believe that AgeTech can grow into a strong vertical just as FinTech as PropTech evolved from fledgling to mature. And despite the heterogeneity in market scope, we see more and more signs of a growing potential for and of AgeTech startups.
And while there was an understanding on the part of business angels and VC’s about a growing demographic group, the belief in the combination of digitization/innovation and the elderly was limited. However, if the merging of this demographic trend and the very strong increase in use of digital capabilities (especially since the pandemic), is correctly explained to investors, the market is picking up.
How Do We Define AgeTech?
For those less at home in the world of new ageing… let’s pinpoint AgeTech.One of the most commonly used definitions is that of AgeTech expert Keren Etkin in her book ‘The AgeTech revolution’:
AgeTech is digital tech that’s built around the needs and wants of older adults, while including them in the design process.
In the broader sense, AgeTech could be any type of technology that improves the lives of aging adults.
We found a European version in Finland, among others, where BusinessFinland is encouraging both AgeTech startups and scale ups to internationalize. BusinessFinland defines AgeTech as follows:
We define AgeTech as digitally assisted technologies, solutions, products or services that are aimed at and help improve the active and independent living of the aging population.
Simply put, we would rephrase it as briefly as possible as “Digitally-enabling the Silver Economy”
The size of the European AgeTech market?
To understand more about the size of the AgeTech market, we like to refer to an early 2019 article in Forbes when renowned longevity expert Tina Woods speaks talked to Dominique Endecott about the global worldwide AgeTech market.
Endicott is a venture capitalist operating between the US and London. As a partner at Nauta Capital, he led his firm’s investment in GreatCall, a mobile wellness AgeTech service oriented at the needs of older customers. Great call had then just been acquired by Best Buy. One of the historical reference deals when talking about the AgeTech market in the US.
Endicott estimated the global Silver Economy as a percentage of the global GDP. Since the over-65s made up at least 20% of the world’s population worldwide, he assumed that the Silver Economy also account for 20% of the global economy.
To estimate the degree of digitization, Endicott made the following assumption(s). He estimated the global digitization rate in 2019 to be 8% but with a halving as far as the 65+ group is concerned. Which brought the digitalization of the 65+ market to 4%.
Endicott projected the same logic for 2025, but raised the rate of digitization of the 65+ market to an acceptable 10%. Conclusion: Endicott estimated the AgeTech market in 2025 at $2.7 trillion
The Global AgeTech Market At a Glance:
Size of the global AgeTech Market 2019: Global GDP x 20% (Silver Economy) x 4%
Size of the global AgeTech Market 2025: Global GDP x 20% x 10% = $2.7 trillion
Adjustments for Europe in a ‘post’-pandemic 2025
Since Endicott’s estimation of the global AgeTech market dates from 2019, below we try to rebuild the reasoning for Europe and assuming we live in a post-pandemic era in 2025.
In Fig.1, we estimate the share of the European 65+ population to be at least 21% of the global population by 2025. But what about the degree of digitalization? And how do you measure it? And what is the impact of the pandemic? Let’s keep the story simple. For example, we could take figures from McKinsey which estimated the degree of global digitalization in 2020 at 55% which is more than double the situation pre-pandemic of 2018.
If we apply Endicott’s logic and assume half that for the 65+ target group, we arrive at +/- 27.5%! However, most sources speak of a slight decline in the degree of digitalization between 2021 and 2022. Of course, we do not know what to expect in the next 3 years but there is no denying that the pandemic has caused a sustained acceleration, especially among the older target group. 25% as a degree of digitalization therefore seems to us a very plausible assumption.
This leads to the following outcome:
Size of the European AgeTech Market 2025: EU GDP x 21% x 25% = 1 trillion
Is €1 trillion a lot? Well, it is comparable to the current GDP of a country like the Netherlands! But what if we adopt some other assumptions?
From Endicott to the European Commission (EUC). A European AgeTech market of €1,7 Trillion in 2025?
In April 2018, the term Silver Economy was nailed by the European Commission to describe the economy linked to the population over 50 and its size was at that moment estimated at €3.7 trillion!
You may not feel old at 50 (or even 65), but it is a widely accepted fact that the business world, when developing and promoting new and existing products, imaginatively often stops at the age of 50. In this way, the EUC emphasized the underestimated value of an economically underserved target group. In doing so, the EUC followed the same reasoning as the US AARP a few years earlier when it published the first US report on what they called the longevity economy. But what about 2025? The same report arrived at an estimate of the Silver Economy, in 2025 of 5.3 trillion euros! If we add to that the recent figures showing that the digitization rate of Europe’s baby boomers was heading towards 35% in 2022, we can safely estimate a 30% digitization rate for the general 50+ population in 2025.
Is this too optimistic? Is €2.8 trillion realistic?
We believe not. And more and more voices are calling for AgeTech and Silver Economy to be lumped together. With the new generation of ageing baby boomers, the degree of digitization is bound to shift further. Moreover, what new products and services are purely offline today?
So are we heading towards a European AgeTech market of 5.7 trillion Euros by 2025? In its report, the EUC had certainly not taken into account the pandemic and current energy crisis or geopolitical changes. But then again, if we halve that €5.7 trillion, we are still at a volume of the European AgeTech market of €2.8 trillion. Which is almost equivalent to the current GDP of a major European country like France. That is more than Endicott predicted for the entire world!
Acceleration in the AgeTech Ecosystem
More older people, a growing proportion of whom are also digitized. We can now safely speak of the definitive start of an AgeTech ecosystem. A further breakthrough will require innovation, (even) more startups and more money from business angels and VCs. And there, too, we see an acceleration. In France alone, there was talk of 300 startups operating in AgeTech by 2021. Given the increase of the number of international applications and the number of countries these applications come from in our own Birdhouse acceleration program, this acceleration confirms cohort by cohort.
2022 has been a particularly exciting year for AgeTech. While the vast majority of VC dollars continue to be invested in the US, other markets have started to blossom as seen by a £260M investment into UK-based home care technology startup Cera. Given how the European AgeTech ecosystem of startups & accelerators has been growing, this announcement comes as no big shock—and although we’d be surprised to see another international funding top Cera’s this year we fully expect it to be dwarfed in those to come.
So if we look back to 2022, we can safely write that AgeTech is coming into its prime.
According to Dealroom, we would have evolved to a figure of $500M investments this year, while Crunchbase recently spoke of over $700M (source)!
Cera, with €300M, tops European AgeTech startups that raised money in 2022.
But Birdie (€30M), Ouihelp (€30M), Florence (€28.5M), Nobi (€13M) Patronus (€7M), Lottie (€7M), Marta (€6.6M), Cuideo (€5M), Helppy (€3M), Colette (€3M), Yonder (€2,6M) also raised handsome money.
And let’s not forget to talk about Closure (€1,5M) and Vermut.
End October, after taking part in the Birdhouse accelerator program in, the young startup Vermut raised €1.5 million in this recent round. BitKraft led the round alongside Gaingels, Service Providers and Calm/Storm. By the way: BITKRAFT is a global investment platform for gaming, Web3, and immersive technology. And now… investing in AgeTech!
So yes, AgeTech is in its prime
And If you are an AgeTech startup that believes Europe is waiting for you, you can sign up now for Birdhouse’s 2023 AgeTech acceleration program.