The secret of investing in the €3.7tn age tech market

Image result for The secret of investing in the €3.7tn age tech market SiftedProminent venture capitalist Mark Tluszcz has a knack for sniffing out opportunities. He invested in Skype before anyone else and dissuaded Israeli startup from an undervalued $400m deal (it went on to raise $5bn in its IPO).

So when he says that the global investment community is missing a trick when it comes to investing in tech for the “silver economy”, a €3.7tn market just in the EU, we’d say it’s worth taking note.

Startups should pay attention as well: he is looking for deals.

The chief executive of Mangrove Partners, one of Europe’s leading early-stage venture capital firms with more than $1bn under management, says he is ready to bust the biggest misconception about people over 65: that they don’t want to use tech recreationally.

His thesis is that so-called ‘Silver Tech’ needs to directly target retirees with money to spend for themselves, rather than innovating the services used to care for the elderly.

This means, less focus on startups with online platforms to help the elderly find qualified carers, or wearable devices that trigger alarms in case of an accident (such as wearable maker GreatCall in the US or care platform Birdie in the UK), and more focus on travel, entertainment and consumer products.

GreatCall and Birdie are providing services that older people (or their carers) do need, but there is a big opportunity for startups providing services that old people may actually want, such as social media platforms for retirees, or entertainment apps designed with them in mind.

In short, seniors just want to have fun. And that’s where the real money is, Tluszcz says.

“The pyramid of age is working against us, but the investment opportunities aren’t just in retirement homes and healthcare,” Tluszcz tells Sifted in an interview.

“The silver demographic is growing, they are technophiles, and they have more money than the demographic has ever had before.”

Older and wiser investors

Tluszcz is hunting for Silver Tech opportunities through his fund, which is one of the biggest in Europe, but says he is struggling to find the right type of company. This is in part because many startup founders are focused on the youth market or don’t understand what older people want.

“There’s a difference between investing in Silver Tech and investing in a more traditional product for the youth,” he says. “The entrepreneur needs to be more savvy to understand what older people care about. It’s not just about being hip and cool, you also have to be sensitive.”

For this reason, Tluszcz believes the input from slightly older venture capitalists is invaluable. He sees his role as more than just finding great startups, but also creating them from scratch and getting stuck in to product design. And it’s not just about tweaking font sizes.

His first Silver Tech investment was a tracking app which pivoted, following his own suggestion, from enabling parents to track teenage children to a product for adult children to track and keep in touch with their still-active older parents.

Tluszcz understood, as both a parent of teenagers and the son of elderly parents, that getting teenagers to install a tracking app would be near impossible, but older parents would take a request from their children to install the Safe365tracking app as a sign that they care.

So, is there anyone out there with a good idea for age tech? Tluszcz may want to hear about it.

Not just Mangrove

Globally, the number of persons aged 80 or over is projected to triple by 2050, from 137m in 2017 to 425m in 2050. By 2100 it is expected to increase to 909m, nearly seven times that of 2017, according to the United Nations.

Tluszcz is not the only one coming round to this investment thesis. In Israel, the largest network of luxury retirement communities, Mediterranean Towers, also has the same kind of idea with a new early-stage venture arm focused on “disruptive solutions for ageing”.

Like Mangrove Capital, the fund — Israel’s first to invest only in startups focused on older people — is prioritising companies that recognise over 50s as end-users in their own right, rather than passive recipients of care services.

Two of the fund’s first three investments are in the recreation sector: Uniper, a TV-based personalised platform providing activities, content and communication services to older adults living at home, and travaxy, a travel-booking website for people with accessibility needs.

“Among the ‘boomer’ population, 55 to 73-year-olds, we’re seeing more ease with technology now and an increasing penetration of broadband internet,” says Dov Sugarman, the co-chief executive of Mediterranean Towers Ventures. “But it’s important to segment the population effectively to really reflect their needs.”

The tech sector tends to take an inappropriate approach, he adds, by generalising that all people over 60 are technophobic and/or in need of care. A better approach is to segment the older demographic by ability (both cognitive and physical) and by economic status, says Sugarman.

Europe’s silver economy

In Europe, there are hundreds of companies focused on age tech, and many European governments are getting behind the sector as the elderly population on the continent rises rapidly.

Some include Nesterly, a company which matches seniors who live alone and have extra space, with young adults who are looking for affordable housing; or Soundmind, which brings conversational artificial intelligence into senior living communities. Zone-V is a Cambridge group founded by former Nokia executives making smartphones more accessible.

There is even a body Aging2.0, a network of innovators focused on older people, which has 14 chapters across Europe, led mostly by startup entrepreneurs in Spain, Italy, the UK, Belgium, the Netherlands, Israel, Finland, France and Czech Republic.

In France, the community is run by Gabriel Monteiro, who works for DialogHealthrunning ‘study tours’ for social and healthcare professionals to meet innovators, to encourage partnerships in the age tech space.

He believes that France is a particularly fertile ground for Silver Tech entrepreneurs since the government prioritised these opportunities in a Silver Economy Roadmap in 2013, and created a not-for-profit organisation for Silver Tech innovation, Silver Valley. “We really have political force engaged in the movement to connect social and economic innovation,” he says. “The Silver Economy is going to be a new area of expertise for France, the government is very clear about that.”

Six years later, and the success of France’s strategy is beginning to show, Monteiro says. “Silver Tech startups are evolving, they are beginning to raise more funds, they are moving beyond just an idea and actually implementing products in the field and gaining traction.”

One such startup is Cette Famille – the sharing economy equivalent of retirement communities, where elderly people are homed with “foster families”. Five years after founding, it offers 6000 available foster homes and recently raised €2m from Newfund Capital.

While investors are honing in on opportunities in recreation and leisure services, Monteiro believes the real potential for startups lies in leveraging the sharing economy culture to engage different generations in Silver Tech. He names two French startups founded by young 20-somethings.

Silver in Touch is like Fiverr’s freelancing platform, but for solving social isolation; it matches young people to elderly people for (paid) activities and services like fixing a computer, cooking food, watching a movie or just having a chat.

Le Talents D’Alphonse flips this around, enabling young retirees to offer their own skills, including babysitting, sewing and knitting lessons, language tutoring, music lessons and photography courses.

Monteiro echoes the VCs in emphasising that age tech entrepreneurs need to do even more research and user-testing than usual.

He has heard of one “co-innovation” workshop with a young entrepreneur and an older woman which demonstrated the core issue, that old people don’t want to tech to watch them, but to really help them.

The older woman’s feedback on the entrepreneur’s Internet of Things solution was “I don’t want to become an object in a house of connected objects.”