It’s called Intimate Capital and its name has nothing do with the closeness of its investors to their money. Newly formed by Israeli Roi Carthy, the fund bills itself as “the world’s only private equity fund dedicated to sexual wellness.”
That means Intimate Capital will invest in companies developing and making sex toys as well as products in areas such as fertility, impotence and menstrual hygiene.
Carthy has organized the fund not as a venture capital fund but as a private equity fund, and seeks $20 million from backers. Intimate Capital will look for working product and potential market demand. The fund will help develop a customer base.
“My thesis is there are major brands out there, brands that are the Nespresso or the Beats for this sector and we need to find those with potential to become popular and then to finance them.”
Roi is a veteran entrepreneur, whose last undertaking was Rainbow (formerly Shine), a mobile ad-blocking startup where he was both an investor and chief marketing officer. Before that, he was marketing vice president at Wibbitz and Soluto.
As he sees it, the industry has been ignored not just by investors but by the high-tech world. It’s due to disruption. The only areas in the sex business that have received significant investment is women’s fertility and male impotence.
“Products whose purpose is to increase sexual pleasure on a personal level for a partner, like sex toys and vibrators, haven’t undergone any transformation for a long time. In the last few years there’s been a lot of innovation in hardware and technology that can be integrated into these products,” he said.
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Roi said startups in the sector can sometime raise an initial round of capital, but they have trouble finding appropriate investors for follow-on rounds. “A company with sales of $5 million annually and the potential to grow more in most cases has no way to raise a second round of capital.