A Silver Age of AI innovation:

Senior healthcare technology is an overlooked market opportunity that’s been hiding in plain sight. In the broader healthcare sector, there are plenty of new health tech unicorns, and many AI-focused health unicorns. But it’s tough to identify a single unicorn in VC-backed senior health tech, a segment we believe is ripe for innovation and growth.

There are a number of reasons for the segment’s limited appeal. Senior living facilities have largely resisted technology and digitization, relying heavily on manual processes. The resistance means most facilities don’t have established software budgets and are not used to buying software. This stands in stark contrast to other industries, for example sales. Because most B2B companies already use sales software, they not only have established budgets for sales tech, but also expect to allocate funds for it each year as an operating expense. In addition, companies like Salesforce have proven that the aggregate amount companies will pay for sales technology is massive.

Because there is little existing spend and also light competition, existing software options for the senior population are inadequate—with few combining the technologies senior facilities need. Facilities require systems that integrate physical-world understanding, labor management, communication, patient care, and insurance administration, among other things. An unsurprising fact: when nursing homes do adopt technology, 30% abandon it in just a two-year period. 

At the same time, entrepreneurs struggle to grasp the complexity of selling software in senior health, where buyers are influenced by healthcare providers, families, patients, and insurers. The tricky nature of the market plus a lack of venture-backed success stories, deters entrepreneurs from diving in. 

Why now? AI as a first line of defense

Today, advances in LLMs and computer vision are aligning in a way that make it easier for startups to gain footing in the senior tech vertical.

Caring for seniors involves extensive in-person monitoring, a problem in an industry with staffing shortages. In 2016, computer vision technology began helping humans fill the gaps, giving machines the ability to “see.” That year, AI in the form of convolutional neural networks (CNNs) made big performance and efficiency gains, using large-scale datasets such as ImageNet. This led to breakthroughs in processes like object detection, image segmentation, and facial recognition, all important for understanding the physical world and the elderly who live in it.  

Senior care also entails substantial manual work, an area where AI can step in too. In the past two years, LLMs have ramped up their capacities for turning unstructured data into structured data—critical for healthcare, since so much health data exists as images or written info on paper documents. Traditional robotic process automation (RPA) companies such as UIPath and Appian have integrated themselves into the healthcare stack to tackle problems like claims processing and billing inefficiencies. We’ve also seen AI-based software startups such as our portfolio company Tennr taking on healthcare’s financial operations, and startups like LeanTaaS and Qventus digging into capacity management and patient flow automation. 

In addition, LLMs can create natural language. So much of senior care involves communication—including sending care protocols to staff, activity updates to families, and daily reminders to the elderly themselves. LLM-based apps might take activity logs as inputs and automatically generate personalized updates for family about a loved one’s status. An app using LLMs can also translate complex medical information into simpler terms for seniors. LLMs can power voice-activated systems that let seniors request information, report issues, or call for assistance.  

Put together, AI advances combined with senior care-specific data lets software “see,” automate mundane workflows, and communicate in a way that’s personalized, real-time, and contextual. 

A 65+ population explosion

The ramp-up in capabilities around computer vision and LLMs is coinciding with a dramatic demographic shift. Around 17% of Americans are currently over age 65, a 3.8% increase from the previous decade. While the percentage may seem small, the growth rate is the fastest in America’s senior citizen population in the past 130 years. By 2050, the number of senior Americans will grow from 58 million (2022) to 82 million (a 47% increase). Other industrialized countries are on a similar path; by 2050, those 65 and older will make up nearly 40 percent of the populus in parts of Europe and East Asia.

For example, my grandfather is 107, and he’s quite a rarity—centenarians currently make up less than 1% of the global population. But that is set to change, as centenarians worldwide are projected to grow to nearly 4 million by 2054. In America, the centenarian count will more than quadruple in just three decades. 

The growth will put new strain on a healthcare system that already experiences frequent worker shortages; it also means the potential for senior-focused health tech to alleviate this pressure is immense.  

A $30B market opportunity

All this spells enormous potential upside for verticalized, AI-native startups in a quietly underserved $3 trillion senior healthcare market.  

We believe that 1% of this market can be disrupted by AI-driven software that’s personalized, timely, and constantly vigilant. 

We’ve bucketed opportunities enabled by recent advances in AI into three categories: AI-powered vertical software for senior living; monitoring and prediction for aging in place; and assistive technology within the senior healthcare subsector. In all these areas, AI can be present wherever a human can’t, and progress here significantly improves seniors’ safety and well-being.

Emerging categories in senior health tech, plus example AI-native startups in these categories: 

Approximately 5% of seniors in the United States reside in senior living facilities, nursing homes, or assisted living communities, but the occupancy rate in those facilities grew by more than 7% in 2023 alone. This market, worth roughly $94.2 billion in 2023, is expected to grow to $150.42 billion by 2029.

As senior living facilities grow more crowded, they also face persistent challenges with resident engagement and employee retention. The turnover rate for caregivers in senior living facilities is chronically high, with the rate topping 50% in some parts of the country. Additionally, 99% of facilities have open jobs, with more than half reporting that their workforce situation has stayed the same or gotten worse post-pandemic. A third of healthcare workers say rising administrative tasks are leading to burnout. In senior living facilities, repetitive, back-office work leaves staff little time to engage with residents and in many cases leads to caregiver turnover.

Impact of AI: Generative AI and LLMs help eliminate these back-office tasks. By building AI-native vertical software that tackles time-intensive processes, facilities can improve patient wellness, employee retention, and the the senior living market’s generally low operating margins. 

Lifestyle and behavior changes present a number of new opportunities in this space. Aging in place has grown more popular, as older adults aim to live in their own homes or independently. This has fueled tremendous growth in senior-focused at-home living technology, specifically around safety and monitoring. The global remote patient monitoring (RPM) market is projected to reach $117.1 billion by 2025, growing at 38.2% year-over-year. 

Impact of AI: Computer vision and LLMs promise to provide new solutions to age-old problems in RPM. An AI-native solution can see, hear, and communicate, preventing issues before they happen and involving caregivers when an incident happens, like a fall.  

Foundation Capital portfolio company SafelyYou is an AI-native startup gaining traction in this area. SafelyYou deploys cutting-edge computer vision technology to detect patterns in senior behavior. For example, did the senior fall? Did they get the care they needed? Did they leave their community when they were not supposed to? SafelyYou’s technology has been implemented by 50% of the largest senior living providers.