Posted on Oct 28, 2019, 3 p.m.
We are all interested to see how the longevity sector will be, as such leading experts have been hitting the spreadsheets and are sharing their projections for the upcoming year, like Dominic Endicott of 4Gen Ventures, the Agetech fund is expected to close fundraising soon to begin investing early into 2020. The following is an excerpt of the discussion with Longevity Technology.
The strong growth of the longevity market is largely being driven be those over the age of 50 as well as those with disposable income. Agetech is about the digital enablement of services for this population and the associated disruption in traditional spending; take for example the $400 billion senior living space sector, which is under pressure, and things ranging from the implosion in long term care insurance to the shift from defined benefit to defined contributions. Expect to see digital giants, unicorns, and start ups target sections of the senior care market, the level of interest in this market will get competitive. Just look at the latest tech: AI, wearables, robotic automation, and advances in self driving cars these are all about extending the digital ecosystem further into society and Agetech will be a big part of this.
The global Agetech market is set to double from $1 to $2 trillion by current estimates, which is driven by two factors, growth in the Longevity Economy spending by those aged 50+ growing from $26 trillion to $37 trillion globally, and the growth rate of digitalization from 4-8%. This may sound like a big number, to investigate top down math with bottom up data it helps to look at companies to see how much revenue is Agetech. The American Agetech market is estimated for the largest 35 American consumer brands that adds up to $350 billion, which suggests that the global estimate of $1 trillion may be too low.
To qualify there are two requirements: spending must be by or on behalf of those aged 50+, and it must be digital, this could be something acquired via a digital channel such as a book on Amazon, food purchased using an app, or an internet subscription. This is a blunt instrument which will be refined with time. The largest and fastest growing Agetech companies are Amazon and Apple which are closely followed by Tesla and AirBnb. Telecoms and cable companies are major Agetech players due to their investments in the infrastructure, but whether they will leverage their strong positions to grow their share or let the Amazons and Apples claim the throne is open for debate. Most other Global 2000 companies are pretty far behind, though we are seeing some interest from retailers and financial services firms.
Although the Agetech market has big players in place, any Fortune 1000 company has an opportunity to grow if they plan ahead and play to win. There are many companies that are set to have advantages to serve the older population such as the communications players because they have digitized their networks and have a large base of older customers. However, the problem is that many of these companies take these older customers for granted and fail to develop new services at the same speed of the tech giants and are at risk of falling behind.
The longevity market is massive and still forming, thus corporate mindsets need to change and adapt quickly or get left behind. Agetech is the next and untapped massive VC market that could be as large as or even larger than Fintech or Proptech. Agetech is broader than healthcare, and it will encompass sectors such as property, transportation,as well as the future of work, finance and food.
VC backed Agetech revenue is currently estimated to be at about $2 billion annually in America, by 2050 this could grow to be $35 billion or more which will be across a broad range of categories including care but reaching far broader. That $1 trillion figure, assuming that American is about $500 billion, means that today we are just a tad short of 1% of Agetech being VC backed. Assuming the American value will double to $1 trillion would imply VC backed firms would only have 3.5% of the total; point being that there is much head room to grow.
VC is all about timing, and we are seeing lots of signs of the Agetech explosion happening now. In addition to Great Call acquiring Best Buy last year for $800 million, Pillpack was also acquired last year by Amazon for $1 billion, and there is a list of around 10 unicorns that are looking like they are stealth Agetech players. As more companies become aware of the spending capacity of the 50+ population we will see the best entrepreneurs shift to serve their needs. This explosion has already begun but has been largely invisible, which is how most older people actually feel. 4Gen wants to increase the visibility of what is already happening.
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This article is not intended to provide medical diagnosis, advice, treatment, or endorsement.