I Had to Tell a Room of Strangers the Most Traumatic Experience of My Life: A Quest For Sexual Health Funding
Sexual wellness is a multibillion-dollar industry, but female sex tech founders still confront censorship at every funding stage.
When Polly Rodriguez was just 21 years old, she was diagnosed with stage three colon cancer. Not only did the St. Louis native have to drop out of college to start radiation treatments, but the therapy sent her into early menopause and caused her libido to plummet. To combat the side effects, Rodriguez ended up at a gaudy adult store in a strip mall near the airport, shopping for sexual wellness products. “[It was a bunch of] mannequins in crotchless onesies and plastic penises lined up on shelves,” she told Forbes in an interview, adding that the experience left her “feeling embarrassed and ashamed to be shopping for these products at all.”
In 2014, she founded sexual wellness company Unbound, which sells a variety of pleasure products like vibrators and lube that are minimalist, cheeky and come in a range of pastel tones and shiny metallic finishes. But funding for her company did not come easily. Rodriguez couldn’t get a loan and ended up paying for all of Unbound’s inventory herself. “[It was] just a little game I call credit card roulette,” she says with a chuckle and a sigh. “I had about five or six credit cards, and I was about $25,000 in debt.”
As the company grew, Rodriguez began pitching Unbound to investors. That “meant having to tell the story of how I went through cancer,” she says. “It was the most traumatic experience of my life, and I had to tell it 500 times to a room full of strangers.” After pitching to hundreds of potential investors for two and a half years, she finally secured a $5,000 check from an angel investor. Unbound now has an estimated $3.5 million annual revenue, according to business insight platform Owler.
Rodriguez’s rough road to obtaining funding for her female sex tech enterprise isn’t unique, despite the fact that the sex tech industry—which is focused on technology that enhances one’s sexuality—is expected to reach $122 billion by 2026, up from just $39 billion in 2017, according to the Global Market Outlook Report for Sexual Wellness from Statistics MRC.
For founders like Rodriguez, funding issues often start with banks, which tend to have heavy restrictions on providing loans to sex-related companies, even when the enterprises are perfectly legal. This is because some industries, including adult entertainment and services, have historically proven to be more prone to chargebacks—reversals of credit card payments—and are almost universally considered high risk. “We’re considered high risk, but the adult industry is pocketed as a big umbrella term,” says Rodriguez.
As a result, many sex tech companies consider getting funding from a venture capital (VC) firm, which may invest in the companies in exchange for equity in those companies. But for female founders, that can be an issue. In both 2017 and 2018, U.S. female-founded startups received just 2.2% of all venture capital investment, according to TechCrunch. In 2019, that number had only increased to 2.8%. (That’s true even though women-owned startups might be a better bet for investors. According to management consulting firm BCG, female founded businesses deliver a higher revenue at 78 cents per dollar invested than those founded by men—only 31 cents per dollar.)
The Vice Clause Conundrum
What’s more, many VC firms have “vice clauses,” which are stipulations set by fund backers that specify ‘vice,’ or unfavorable industries, where their money shouldn’t be invested. These industries may include cannabis, gambling, alcohol and sex. Maureen Pollack, the founder and CEO of WaterSlyde, a bathtub faucet attachment designed to provide sexual pleasure and provide feminine hygiene, thinks vice clauses may have indirectly had something to do with her funding hiccups. “Everybody loved WaterSlyde, but then suddenly they’d say, ‘I’m so sorry. We can’t actually continue because we have contracts with other clients stating that we won’t be in the adult space.’”
And then there’s the fact that women make up only 9.5% of decision-making positions within VC firms. This is a massive issue for female sex tech founders, as some men may squirm at the idea of talking openly about female sexual pleasure. In turn, women have to get creative with their pitches. “I walk into a room and one of the first words out of my mouth is vaginas or orgasms,” says Lora Haddock, founder of sexual wellness company Lora DiCarlo, which creates products that promote women’s pleasure while challenging social stigma. “I have no qualms about talking about real issues like [sex] and basically pulling people out of their comfort zones.”
Other companies, like WaterSlyde, may choose to lean heavily on the feminine hygiene or sexual wellness side of their products when pitching. But censorship in other areas also leads to the lack of VC investments. One big one is that sexual health companies may not be able to freely advertise in print or even online. “We don’t even say stimulation,” Pollack says about Facebook ads. “Even though a back massager could say stimulation. I don’t say anything, and I still get banned.”
“Sexual wellness companies are [often] barred from all of these growth platforms [advertising and social media],” says Andrea Barrica, the founder and CEO at O.School, an online sexual education platform, who also has a background in venture capital. “Venture capital is all about fast growth” so if companies can’t advertise, it may stunt their businesses, which is a huge turn off for potential investors.
Of course, plenty of female sex tech founders find funding outside of banks and VC firms. Some self fund or ask friends and families for loans, and others turn to crowdfunding. Women-founded sexual health company Dame had the first sex toy to ever be funded on Kickstarter; and Ovee—a sexual and reproductive health platform—was funded via two different crowdfunding sites. Still others, like Lora DiCarlo’s Haddock, get some money from grants. She received $100,000 from the state of Oregon to develop Osé, a vibrator for blended orgasms. Still, it’s very hard to get products fully funded through crowdfunding, grants, or money raised from friends and family.
The good news: For women looking for VC money for a sex tech firm there may be hope yet. More VC firms—like Backstage Capital, which is focused on investing in underrepresented founders—are starting to move away from ‘safe’ industries. “One of the reasons we’re interested in sex tech is that it’s a huge market,” says Christie Pitts, co-founder and general partner of Backstage Capital. “It seems obvious, right? But unfortunately, the sex tech industry and founders in this space still haven’t necessarily received the recognition they deserve.”