It’s Time for an AgeTech Revolution
My grandfather passed away in 2014. Three years later, his wife, my amazing grandmother, fell at home and broke her hip. Despite quickly getting a hip replacement, she unfortunately was never the same. She was shortly thereafter diagnosed with Alzheimer’s, which as so many of us know, is one of the cruelest diseases. After a tough four-year decline, she sadly passed away in 2021 at the age of 82.
Besides those last few years, she lived a fantastic life! She loved to spend time with her four grandchildren, play golf, and go out to eat. She was famous in our family for asking what our lunch and dinner plans were while we were just starting to eat our breakfast. Sadly, though, her end-of-life experience had little resemblance to her earlier years.
My grandmother’s end-of-life journey is by no means an uncommon one. The truth is that the last few years of life can be quite cruel to many — even to those who lived vibrant and energetic lives.
And it’s not just the last few years of life that can be challenging — the process of aging is often dreaded. Just take a look at any Hallmark birthday card and you’ll quickly see how ubiquitous this dread is. “Not another birthday.”
As investors have poured billions of dollars into digital health, innovators are starting to take notice of the massive opportunity that exists to transform both the aging process as well as the end-of-life journey. Not only is there an opportunity to make the second (and third) season of life better for individuals and their families, but there is also a huge business opportunity that is ripe for the taking by forward-thinking companies (check out the amazing work that AARP is doing to drive innovation with their new AgeTech Collaborative).
At Route 66 Ventures, we are excited about the innovation we are seeing taking place and feel fortunate to get to be a part of the growing ecosystem of investors supporting AgeTech entrepreneurs. What I’ll aim to do here is first explain why we believe the time is now for innovation in this space, and then lay out a few specific areas where we are particularly excited. (Note: We like to use the term “AgeTech” to refer to technologies and services geared towards older adults. Other terms that have been used to describe this space include “SilverTech” and “SeniorTech.”)
Why we believe the time is now
1) Demographic trends
Every day ~10K people turn 65. While older adults (65+) made up only 13% of the population in 2010, in 2020 they made up 17% of all Americans. That’s a change of 4 percentage points over only 10 years! What’s even more striking is that this trend is expected to continue. As shown below, older adults are estimated to make up 21% of the population in 2030. This will represent the first time ever that older adults compose 20+% of the population, and the US Census Bureau forecasts that in 2034 there will be more adults over the age of 65 than children under the age of 18.
If there ever were a time to invest in technologies that make the process of aging better, I’d say the time to do so is now.
2) Older adults are becoming more tech savvy
According to a survey from Rock Health, ~70% of adults aged 65 or older own a smartphone and close to 60% have downloaded an app.
While COVID was especially devastating for older adults, the pandemic also accelerated the adoption of technology amongst this age cohort. ~60% of older adults embraced technology more during the pandemic and there was a 300% increase in the number of older adults using telemedicine. Moreover, as the youngest Baby Boomers transition into the 65+ age segment, they will become the most tech-savvy cohort of older adults to have ever lived.
As older adults continue to get more comfortable using technology, there will be immense opportunities to leverage tech in new and novel ways amongst this population. This will include new products, tech-enabled services, and online networks and communities. As companies realize this trend, they will be able to design technologies specifically catered to older adults and further increase adoption.
3) Impact caregiving has on employers
According to AARP, ~42m adults, or ~17% of the adult population, served as a caregiver to an adult over the age of 50 in 2020. This figure is up from the 14% of the adult population that served as caregivers in 2015, and it is likely that this figure will continue to increase as the population of older adults continues to grow. Millennials are being dubbed the “sandwich generation,” as they have both young children and aging parents to help care for.
A recent study from Harvard Business School showed that ~80% of employees with caregiving responsibilities reported that their caregiving duties impacted their productivity at work. Moreover, the report found that about one third of all employees had left a job at some point due to caregiving responsibilities.
As an increasing percentage of employees become caregivers for older adults, employers will be forced to look for novel solutions that ease the burden on their workforce. New benefits will enable employees to feel more supported, and will allow them to be more productive at work, creating a win for both employers and employees.
4) Policy changes
In recent years, the Center for Medicare & Medicaid Services passed legislation that expanded the type of supplemental benefits that Medicare Advantage (MA) plans can provide. These regulatory changes allowed MA plans to expand their benefits beyond the realm of traditional “health” benefits. Examples of newly covered benefits include non-emergency medical transportation, food delivery, and health and fitness. As MA plans have become more robust in their benefit offerings, MA has increased in its penetration of the Medicare-eligible population, growing from 24% of the Medicare-eligible population in 2010 to 42% in 2021.
Adoption of these new benefits will likely increase over the next several years as MA plans spend more dollars marketing their unique benefits in an effort to draw older adults to their plans. These policy changes will, in turn, provide a sales channel for new AgeTech products and services that are targeting adults aged 65 and over.
Themes we’re excited about
There are countless ways to slice and dice the AgeTech market, and this post is not meant to be a robust or exhaustive list of the space. Instead, this is meant to be a short overview of three areas we are particularly excited about. (Note: for a more robust landscape of the AgeTech market, check out Keren Etkin’s excellent overview here.)
1. Thriving enablers
Most people vocally dread the process of aging and do everything in their power to prolong the inevitable. This isn’t altogether surprising. The age-old “retirement narrative” paints a picture of 65-year-olds stepping back from work and stepping into lives of leisure.
And this made sense through much of the 20th century when retirement was relatively short-lived. Today, however, most retirees are living for more than a decade after leaving the workforce. While some thrive during this stage of life, for many, the “retirement narrative” is nothing short of fiction.
(Note: When the retirement age was set at 65 in 1935 with the passage of the Social Security Act by FDR, the average life expectancy was 62. That meant that the average individual did not actually live to retirement age. Fast forward to 2020 and the average life expectancy has increased to 78. Despite the 16 year increase in life expectancy, the age at which individuals are eligible to receive full retirement benefits has only increased by 2 years to 67.)
As we continue to live longer, we need to change the narrative around aging. Rather than dreading aging, we can intentionally design products, services, and communities that help individuals thrive in older age. New companies can give older adults ways to stay connected and feel inspired and fulfilled.
Not only will this make the process of aging better, but it will also have massive health benefits. According to the CDC, social isolation is associated with a 50% increase in risk of dementia. As we rethink what “retirement” and “older age” can look like, we’re not only designing a better state of being, but we’re also enabling older adults to live longer and healthier lives.
We’re excited by companies that are making it possible for older adults to continue working into their 70s, 80s, and potentially beyond. Continuing to work allows for mental and emotional stimulation, which can stave off chronic disease. A 2015 study of 83K older adults found that people who worked past 65 were 3 times more likely to report being in good health and only half as likely to have serious health issues.
However, working past traditional retirement age isn’t always easy. According to a recent survey by AARP, 78% of older workers reported having seen or experienced age discrimination in the workplace. While we undoubtedly need to create more inclusive workplaces for older adults, there is more that can be done. As older adults remain in, or return to the workforce, there will be opportunities to create robust networks that connect older adults to employers. Additionally, creating low-friction and on-going education can be a useful tool to ensure older adults have the required skill set to succeed across various employment opportunities.
Beyond staying in the workforce, there is tremendous opportunity for innovators to enable meaningful social interactions and facilitate community for older adults. Given the detrimental effects of social isolation, it is critical that older adults have easy ways to interact and form meaningful relationships. These relationships certainly don’t have to be digital, but we believe there will be a role for technology to foster and support these interactions.
Building companies focused on older adults is also a smart business strategy. Adults aged 50 and over contributed $8.3 trillion (that is trillion with a T!) to the US economy last year. As shown in the chart below, American adults 50+ would be the 3rd largest economy in the world by GDP.
2. Aging in place
According to AARP, 90% of older adults want to age in their home. However, aging in place can be challenging and lead to further health complications. After all, not all homes are conducive to the evolving needs of older adults, and some older adults are unable to perform all of the household tasks that they were once able to do.
Despite the challenges faced by the prospect of aging in place, there are a number of clear benefits. Not only is it the preference of the vast majority of older adults, but it is also significantly more economically efficient for families and for taxpayers. According to CMS, it is half as expensive to have seniors age at home compared to in residential facilities.
We’re excited by the proliferation of products and services that strive to make it easier for older adults to stay in their homes. This includes next generation fall prevention devices, remote patient monitoring devices, and products that make it easier for seniors to remain connected to loved ones. Beyond devices, there are ways to offer wrap-around services that can make it easier for older adults to live independently at home. From managing day-to-day tasks to helping with errands, these services can go a long way in making the home a more feasible long-term option.
The explosion of telehealth has also helped enable older adults to safely live at home and receive low-acuity care from the comfort of their homes. As the types of care that can be provided in one’s home expand, there will be less of a need for older adults to move into institutional settings where care is traditionally more easily available.
3. Caregiving
The roughly 17% of all Americans that served as unpaid caregivers to adults over the age of 18 in 2020 provided approximately $500b of unpaid work in the US. Caring for others is incredibly challenging and often leads to stress and burnout. On average, unpaid family caregivers provide more than 24 hours of caregiving work a week to their loved ones. It doesn’t take a rocket scientist, then, to understand why the overwhelming majority of unpaid family caregivers who also hold a job report being absent when they are at work.
The good news, however, is that we are waking up and realizing how critical caregivers are in supporting older adults. Entrepreneurs have been building solutions that provide emotional support, medical training, and care navigation to unpaid caregivers. We’re excited about the potential these solutions can have on making the caregiving journey better for both the individuals providing the care and the individuals being cared for.
While there is a massive need to provide more and better support for unpaid caregivers, we are also excited about companies working in the paid caregiving space. According to a study by Mercer, the US will face a huge shortage of professional caregivers by 2025. Mercer estimates we will have a gap of approximately 450k home health aides, 100k nursing assistants, and 100k medical and lab technologists and technicians. In light of this shortage, we believe there is a need for innovative solutions that can increase the supply of paid caregivers and reduce the friction to getting credentialed.
In addition to needing more caregivers, there have been a number of companies that are providing tech-enabled services for paid caregivers. These services include marketplaces, automating clinical workflows, and improving patient management systems. While these solutions won’t lead to more caregivers, they will reduce the burden felt on the existing labor pool, which is definitely a step in the right direction.
As a founder once wisely shared with me, the death rate is 100%. It’s therefore in every single one of our interests, and in the interests of our loved ones, to build a better future where we redefine what it means to age.
The time for the AgeTech revolution was probably several years ago. The population of older adults is rapidly growing, and older adults are highly savvy when it comes to using tech. In other words — what are we waiting for?
If you are currently building a business, or thinking about starting a business in the AgeTech space, please don’t hesitate to reach out! We’d love to meet you and learn about what you’re working on.
