Sexuality in Conversation

Why Won't Silicon Valley Invest in Women's Sex Tech?

Now that our country’s collective sexual traumas and misdeeds have been brought out into the light after #MeToo and #TimesUp, America is facing a difficult morning-after situation: What's next? Everyone is looking for a clear path forward, but in a society where coercion and assault have long been conflated with “normal” sexuality, where do we start? Where’s the roadmap leading us to healthy sexuality?

Lucky for us, there’s a group of badass women who are working on drawing us that map already. They’re the founders of start-ups in the burgeoning industry of sex tech—defined as “technology, and technology-driven ventures, designed to enhance, innovate and disrupt in every area of human sexuality.” Together, they aim to demystify sex by opening it up to conversation, investigation and, ultimately, improvement. The women at the helm of the industry believe that the better we understand sex, the better equipped we’ll be to move forward from #MeToo equipped with the tools we need to improve our sexual health and our relationships.

There’s Liz Klinger of Lioness, who’s invented a vibrator that can not only deliver pleasure, but also collect data on sexual response and orgasm while it does. “I don’t see sex as some sort of mysterious thing,” says Klinger. “It never has been. We just haven’t had the tools or the place to have real conversations about it.”

And Andrea Barrica, founder of O.School, a new online platform where sex educators live-stream workshops on topics ranging from body positivity to reclaiming sexual pleasure after trauma. In the current climate, where there’s so much shame and silence around sex, Barrica asks, “How do you know what enthusiastic consent looks like? How do you negotiate your desires to a new partner?” O.School is the platform to answer those questions, says Barrica, and to “foster sexual respect.”

And there’s Cindy Gallop, the advertising-executive-turned-entrepreneur behind what she and her team at MakeLoveNotPorn.tv call “the social sexual revolution.” “For the past nine years, MakeLoveNotPorn.tv’s single-minded mission has been one thing and one thing only,” she says. “To make it easier for everybody in the world to talk openly and honestly about sex. When we do that, amazing things happen.”

Gallop and a cadre of other female sex-tech founders share a vision of the future where sex is better understood and therefore less scary for everyone: “The only way we end rape culture,” Gallop believes, “is by inculcating in society an openly discussed, promoted, understood, operated and—very importantly—aspired to gold standard of sexual values and behaviors. When we do that…we end sexual harassment, we end sexual abuse, we end sexual violence—all areas where, currently, the perpetrators rely on the fact we do not talk about sex to ensure their victims will never speak up.”

These women are passionately devoted to creating companies that open up human sexuality, but they have all had an incredibly difficult time getting funding to put their visions into practice. “I've had cancer, I grew up in the south side of Saint Louis, I've been through a lot of hard stuff,” says Polly Rodriguez, the founder of Unbound, a sexual well-being company—and cofounder of Women of Sex Tech, a group dedicated to increasing diversity and the number of women in the sex-tech industry. “But getting Unbound funded was the thing that took the most resilience.”
Male investors have a difficult time wrapping their minds around talking to women about sex and business in the same conversation.
“The world makes it extraordinarily difficult to innovate and disrupt social narratives around sex,” continues Gallop. “Many people have tried and just given up because it's so difficult because every piece of business infrastructure says ‘no adult content,’ so they can't get funding and they can't get support.”

Support, like the ability to process payments for their products and services. American Express won’t even allow sexually focused business to process their cards. Most big online payment processors don’t do business with sex-oriented companies, either. And those companies can’t place ads on social media or television, or use most crowdfunding platforms. Suki Dunham, a founder at OhMiBod, a tech-enabled sex toy company, relates that her company has even been turned down by accounting firms and catalog printers, due to the nature of her business.

The day-to-day financial operations of a sex-tech startup, though, don’t mean too much without startup capital from investors. And that’s where female sex-tech founders are struggling most. The stats on female-led startups are dismal: Only about 17 percent of founders across all industries are female, and only a meager two percent of total venture capital funding goes to the companies they start. And it’s even tougher for women starting sexually-oriented companies, primarily because of the silence and shame that they’re trying to combat in the first place.

Most big banks are unwilling to lend to sex-focused companies due to morality clauses handed down by their boards of directors. Those same companies are not eligible for Small Business Administration funds—Suki Dunham says the SBA rejected OhMiBod because it was “a prurient brand” when she applied for help a decade ago.

That means that most sex-tech companies have to seek funding from private investors. But in America, where 92 percent of the investment community is male, female sex-tech founders face a steep uphill climb. Male investors have a difficult time wrapping their minds around talking to women about sex and business in the same conversation, especially when they’re pitching companies that are focused on female sexuality.

“It’s hard,” says Andrea Barrica of O.School. “You’re pitching to people who fundamentally tell you that this is not a problem, and don’t understand it because it’s not a problem for them.”

Estrella Jaramillo is a founder at B-Wom, an app focused on improving pelvic floor health. “A lot of pelvic health devices were being sold at sex shops, but not at pharmacies,” she says. Because there are so many taboos around entering adult stores, women weren’t getting access to products that could improve their pelvic floor health, increase sexual pleasure and repair injuries that she says more than 60 percent of women suffer after giving birth. Clearly, there’s a huge need for B-Wom in a vastly underserved market—which, in investor terms, means there’s a massive amount of money to be made.
Nobody currently is putting their hand up going, ‘bring me sex tech.' Sex is the one area where you cannot tell from the outside what anybody thinks on the inside.
But that’s not how investors responded to her, says Jaramillo. “Anything that has to do with the intimate parts of a female body is going to be hard to get funded,” she says, recalling the many times that she’s met with male investors, who “are terrified by the fact that I just said the word ‘vagina’ in public, out loud, in the middle of a presentation.”

Meanwhile, says Cindy Gallop, “A startup called Roman has raised $3.1 million [in October 2017] in Silicon Valley from a bunch of very well-known Silicon Valley VC funds for their solution for male erectile dysfunction. You bloody bet sexism is operating there.” Gallop spent the past three years trying to raise two million for her sex-tech venture without luck. Then, in January of 2018, the funding finally came through—from the same anonymous investor who provided the MakeLoveNotPorn team with seed funding five years ago. The investor must have realized that nobody else was going to step up.

It is by all accounts difficult to get any company funded, but most founders maintain that persistence pays off. It’s just a matter of finding the right person, or people, who share your company’s values and understand its goals. However, finding a sex-positive VC with no qualms about putting his name behind a “prurient business” is like picking a needle from a haystack. “Nobody currently is putting their hand up going, ‘bring me sex tech,’” says Gallop. “Sex is the one area where you cannot tell from the outside what anybody thinks on the inside.”

Angel investors, whose investments aren’t as public as VCs’, can be a good workaround, if you can find them. But the private nature of those investments can be a minefield for female founders of sex-tech companies, whose business objectives can be conflated with other interests. Meg Ross of Nooky Box, a company that curated high-end sexuality products in themed boxes, was thrilled when she found an angel investor. “Everything was going great. The private investor gave us some seed money, and we anticipated getting our next funding round from the same person. We reached all our goals to get the next round of funding,” she says. “Then, I suddenly found out that the investor had a crush on me and wanted to marry me! When I, of course, said, ‘No, this is ridiculous. These are two separate things altogether,’ that wasn’t an acceptable answer. And our funding got pulled.”

Nooky Box continued to seek funding afterward, but sadly, the hunt led nowhere. Nooky Box let go of its subscription box service last fall, and as of the time of this writing, its future is uncertain.

Polly Rodriguez of Unbound says that she’s been on the receiving end of unwanted advances as well, particularly from male mentors. “Often, the mentorship relationships are the ones in which sexual harassment happens,” she says. “I've been in multiple situations where it’s: ‘I thought you were mentoring me, and now you're asking me to get another drink and continue the conversation back at your apartment. That’s not what I signed up for.’”

It’s an uncomfortable, unacceptable situation that needs to be fixed if the rest of us ever want to read the sexual roadmap these founders are trying to draw. So, how can these founders get the recognition and funding they need?
It’s an industry that’s going to grow from 15 billion to 50 billion by 2020 in some projections. The sexual wellness industry is absolutely about to blow up.
For one thing, more women—who might understand the problems that female sex-tech founders are trying to fix—need to start investing. “Other women, who are either in the industry or are passionate about sex-positivity and social missions—those are the ones that are going to put their money on the line. Women see the bigger picture, the greater good that these products could do,” says Stephanie Berman of Berman Innovations, which produces ejaculating dildos to help same-sex couples conceive, trans individuals overcome body dysmorphia, and cisgender men deal with erectile dysfunction.

But until more women begin investing, female sex-tech founders are taking matters into their own hands. Meg Ross of The Nooky Box recommends that, since male investors don’t always take women founders seriously, they need to do it for themselves. “Be overly professional from the very, very beginning. Take yourself very, very seriously, and demand that everyone else does,” she advises would-be sex-tech founders.

“One piece of advice I’ve gotten from other entrepreneurs is that, in early-stage investing especially, investors are driven by fear and greed,” says Liz Klinger of Lioness. “You need to reduce the fear and optimize on the greed.” In order to convince investors that there are, indeed, vast opportunities for money-making in sex-tech, Klinger believes, “When there’s a win in sex tech, we need to be really loud about it. Because that’s going to raise up everybody else. And make this a sector that’s more appealing to investors.”

Estrella Jaramillo of B-Wom believes that investors need to take a hard look at their inherent biases. Women in business, she says, “still have less credibility. We are perceived as different from men.” But, she adds, “More and more research studies are showing that companies that have female cofounders perform better over time,” she says, which means that investors need to be more willing to listen to what female founders have to say if they want their investments to do well.

Andrea Barrica is confident that smart investors will read the writing on the wall: “The world is changing. Millennials are twice as likely to identify as LGBTQ. Single women outnumbered married women in America for the first time in history,” she says. “Look at all the trends of society and where it’s going, and it’s obvious that this is where people should be investing.” The sex toy industry—a big part of the sex-tech sector—is booming. “It’s an industry,” says Andrea Barrica, “that’s going to grow from $15 billion to $50 billion by 2020 in some projections. The sexual wellness industry is absolutely about to blow up.”

But true to form, female sex-tech founders aren’t waiting around for that change—they’re making it happen. Barrica’s company, O.School, has raised on million so far, mostly with willpower and pure grit.

“When you have a truly world-changing startup, you have to change the world to fit it, not the other way around,” says Cindy Gallop, who’s starting the world’s first and only sex tech investment fund. “If reality tells me that I cannot grow MakeLoveNotPorn the way I want to, I'm going to change reality.”

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