- Former marketing executive Roi Carthy left corporate life to found Intimate Capital, an investment company focusing on “sexual wellness” startups.
- Carthy told Business Insider that his new venture is structured more like a private investments company rather than a traditional venture capital firm, in part to test his investment thesis but also to get large investors comfortable with the idea of investing in vice-adjacent startups like sex toy hardware makers or lingerie companies.
- Carthy said he is following the examples of several similarly structured firms that have invested in cannabis startups, another industry that sometimes falls under traditional vice clauses.
- Intimate Capital is targeting $20 million in funding to begin investing in sexual wellness startups at the Series B stage, which is where Carthy says most of these companies struggle to gain traction.
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As Roi Carthy, the founder and managing partner of Intimate Capital tells it, investing in sex tech was an unplanned surprise.
The former marketing executive held senior roles across tech companies in Israel, but had been keeping an eye on a growing market he calls “sexual wellness.” It includes both “leisure” and “health” verticals for men and women, and comprises everything from vibrators to erectile dysfunction and fertility treatment. He watched on the sidelines of the industry for upwards of five years before leaving his corporate role behind and starting Intimate Capital.
Carthy told Business Insider that Intimate Capital will look a lot more like a private equity fund than a traditional venture capital fund because of some of the limitations associated with a vice-adjacent industry like sex tech. This private tiered model, as he calls it, was proven successful when investing in another buzzy but controversial space: cannabis startups.
“Cannabis did open the door,” Carthy told Business Insider. “It’s almost as if there was a private tier moment where people were starting to think about [sexual wellness] like cannabis. We are building an outfit here that deals with this in a clear, professional manner, and it seems like it hit the right nerve at the right time.”
Read More: Investors are pouring millions of dollars into fertility treatment startups. Here’s how one of Silicon Valley’s legendary venture firms is approaching investment in the buzzy industry
Intimate Capital is pursuing $20 million in initial funding, as first reported by Axios. Carthy told Business Insider he is looking to hire a small team based on expertise and geographic markets. Carthy explained that the private tier model allows him to be more flexible with hiring and fundraising than a traditional venture capital firm, which can be subject to vice clauses in limited partner deals that restrict investments in certain industries.
“The space is just broadly undercapitalized,” Carthy said. “There are those that do get funding and played their cards right, but then there’s nowhere to turn for a Series B. There’s not doubt a different company in a different space with the same metrics could fundraise, but that’s not the case whatsoever for sexual wellness.”
Carthy said Intimate Capital will begin testing its thesis with investments in Series B rounds to help bridge the funding gap he described. Once the firm has made some successful returns, Carthy said he will start looking downstream to earlier rounds.
“There is a Nespresso of sexual wellness, a Beats of sexual wellness, and a Lululemon of sexual wellness. We want to find them and capitalize them to create the breakthrough product that makes these brands into household names,” Carthy said.
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