Sex Toy Industry Has Quietly Turned Into Multi-Billion-Dollar Business

Sex Toy Industry Has Quietly Turned Into Multi-Billion-Dollar Business
Smart high-tech product designers and clever investors are hunting down the next hot opportunity.

By David Rosen    Alternet

Earlier this year, Diamond Products acquired Jimmyjane, the San Francisco sex paraphernalia company. Diamond Products is a joint venture between Pipedream Products, another leading sex-toy company, and Brookstone Partners, which according to a Bloomberg is a New York-based “private equity firm that seeks to acquire companies or invest in growth equity situations in the middle market. The firm invests in companies located in North America and focuses on industrial light manufacturing, distribution and logistics, and business services.” And sex toys.

In keeping with America’s corporate business culture, neither company would disclose the amount of the all-cash deal.

The new Diamond Products describes itself in the following glowing terms: “The Company’s product portfolio includes adult toys, lingerie, games, lotions and creams that are sold in over 80 countries through 5,000 retailers as well as e-commerce websites.”

Sex toys are a big business that has been rebranded “sexual wellness.” U.S. revenues are estimated at $15 billion and the business site, the Street, projects sales to grow to $52 billion in 2020. The sex-toy industry has changed over the last decade, driven by a change in cultural values and the anonymity of the Internet. Sex-toy outlets have shifted from retail shops serving the raincoat crowd to online sites catering to every whim and price point. The hard-scrabble sex-positive activists who started San Francisco’s Good Vibration, Babeland in Seattle and the Pleasure Chest in New York have given way to Amazon, which offers an estimated 60,000 products, and Silicon Valley-backed ventures and crowdfunding fantasies.

Sex toys are a growth market attracting an ever-growing customer base as well as smart high-tech product designers and ever-clever investors looking for the next hot opportunity. And nothing is hotter than sex.

Last year, Cave Inc., a San Francisco-based startup specializing in elegant, up-market sex toys, raised $2.4 million from a group of 60-plus angel investors. Michael Topolovac, the company’s CEO, was surprised at how little stigma he faced when pitching the company. For him, investors want results and sex is just one more market. “This is a massive market opportunity with very few players and a community eager for a new product,” he said.

“The quality of design for women’s most intimate products has long suffered,” insists Ti Chang, the Cave’s co-founder and head of design. In an unlikely coincidence, Chang, a Georgia Tech graduate, met Topolovac in China where she was promoting her startup, Incoqnito, a venture integrating jewelry and erotica. They merged their efforts and Cave was born. She noted, the “dearth of good design, coupled with the fact that the industry is dominated by men designing for women, is exactly why I began designing sex toys.”

“The industry is shifting and women are demanding more from their toys,” she added.

In February 2014, Shauna Mei, a former Goldman Sachs analyst and founder of AHAlife, launched AHAnoir, billed as “a premium destination for exclusive, high-quality adult products and boudoir accessories.” Mei raised about $21 million to launch AHAlife in 2010, a membership site offering recommendations on high-end clothing, cosmetics and other boutique products.

Other sex startups have turned to crowdfunding to raise early-phase monies. Brian Krieger, co-founder of Minna Life, a San Francisco sex toy startup, ran a successful IndieGogo campaign raising $83,777, well over its goal of $60,000. As Krieger said, “Most people don’t personally think vibrators are taboo, but they think everyone else does. I want to tell investors, ‘You’re not the only one. Nobody cares.'”

VibeEase, co-founded by Hermione Way, is a San Francisco startup promoting an app-controlled vibrator. It bills itself as “the world’s first wearable, smart vibrator bringing fantasies to life with an immersive pleasure experience.” It raised $100,000 through IndieGogo, more then three times its original goal of $30,000, and is currently seeking seed-round funding.

David Rosen is a regular contributor to AlterNet, Brooklyn Rail, Filmmaker and IndieWire. His website is DavidRosenWrites.com. He can be reached at drosennyc@verizon.net.

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