In a significant consolidation move, Willow, a San Francisco-based startup known for its wearable breast pumps, has acquired Elvie, a London-based femtech pioneer, in a deal worth $241 million. The acquisition marks a turning point in the femtech industry, which has collectively pulled in over $5 billion in funding in the last five years but is facing market challenges.

The deal comes as Elvie enters administration, with Willow taking on the existing business, including its products and team. Elvie had raised over $186 million in funding from investors such as Octopus Ventures, BlackRock, and Blume Equity, with a last valuation of $241 million, according to PitchBook data.

Willow CEO Sarah O'Leary stated that the transaction was the result of many months of conversation, with Willow approaching Elvie to buy it. However, as talks progressed, Elvie's runway began to dwindle. The acquisition is seen as a strategic move by Willow to expand its product offerings and team, with 170 people currently working across London and Bristol, although some are already working out their notice periods.

Willow has raised around $254 million in a combination of equity and debt from investors including NEA and Meritech, with a valuation of $256 million in 2021. Although the company's valuation dropped in 2024, O'Leary declined to comment on its current valuation, hinting that the company may be looking to raise more funding later this year.

The acquisition highlights the challenges facing the femtech industry, estimated to be a $60 billion market this year. The market has been challenging for later-stage startups, especially those not focused on AI, with limited exit opportunities. Furthermore, the market has been flooded with cheaper products, making it difficult for femtech businesses to stand out.

Hardware startups, in particular, have struggled to turn a profit, making consolidation a necessary step for survival. Willow's acquisition of Elvie marks a shift towards building a wider platform, with O'Leary hoping to create a consolidator in the femtech space.

Femtech as a category has emerged over the years, driven by innovations in cloud, smartphones, and big data analytics, which have made it easier to build apps and hardware prototypes. The industry has also been fueled by an empowered demographic demanding tech that meets their needs. Willow's challenge now is to convert this demand into profit over time.

"We want to show that femtech products are not only great stories but great businesses," O'Leary said, highlighting the company's commitment to building a sustainable and profitable business model.

The acquisition of Elvie by Willow marks a significant milestone in the femtech industry, signaling a shift towards consolidation and platform-building. As the industry continues to evolve, it remains to be seen whether Willow can successfully convert its vision into profit and become a leader in the femtech space.