Tips and Strategy for Founders of Early-Stage Sex Tech Startups – TechCrunch


Fundraising remains “a paradoxical question”

Starting from month, personal care and beauty retailer Sephora sells vibrators on its US website. This is a significant milestone not only for Dame and Maude, the startups she has partnered with, but also for the sexual wellness product category.

These startups operate in a different environment than founders encountered just a few years ago, but raising funds is still not an easy task, a “paradoxical problem” to manage, according to Andrea Barrica, CEO of the platform. of O.School sexual well-being education. “When you go into a space where very few people have been, with a lot of obstacles, you probably need more money, but we usually have to do it with less money initially,” he said. she told TechCrunch.

To understand how early-stage sex-tech startups can meet this challenge, we also spoke to founder Lora DiCarlo and investor Carli Sapir, founding partner of Amboy Street Ventures. As for Barrica, she now sits on both sides of the table – in addition to being an entrepreneur, she invests and raises funds.

Our conversations indicated that things are opening up: there are more funding sources to tap into, and convincing investors is easier than before. But fundraising is still more difficult than in other verticals.

More than a few venture capital funds will never invest in sex tech due to “vice clauses” that contractually require them to pass on companies that offer products or services in categories like alcohol, tobacco, gambling, weapons, pornography and sexual well-being.

“The bigger the fund, the more common it is” for it to have a vice clause, Barrica said, adding that the restriction is far-reaching: “I’ve come across smaller funds that have conservative LPs.”

To find out, she said: “You just have to ask fund managers or partners, ‘We’re really excited about sexual wellbeing as part of health and wellness. Is this going to cause a problem with any of your vinyl records? »

Asking a general question about their concerns is a good idea, because even without a written clause, fund managers might not be inclined towards investments that might upset their sponsors. “We venture capital funds raise a new fund every three years or so, and they don’t want to lose any investors,” Sapir agreed.

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