A Look at the Challenges Sex Toy Startups Face After Launch

When discussing business startups, the attention generally focuses on tips and advice for getting your idea off the ground. While it's an essential step, turning your business into a long-term achievement requires overcoming a unique set of obstacles at each stage. Startups don't fare well in the business world, particularly sex toy startups, which face a peculiar set of challenges.

The most frustrating aspect is that sex toy manufacturing is an incredibly lucrative industry, which makes these challenges even more perplexing.

Insufficient Capacity to Meet Demand

One positive issue that a startup may experience is an inability to keep pace with demand. Love Not War's first year was a huge success, with interest from global markets and large mainstream retailers eager to stock our products. Demand in countries outside the United Kingdom and the United States was also rapidly increasing. Despite the growth, the pressure to expand and evolve mounted. Meeting the demand meant establishing distribution centers in various locations and managing the maintenance of adequate stock to fulfill growing B2B orders.

While expansion is a healthy sign that a business is flourishing, it requires constant effort, time, and resources. The systems we had in place at Love Not War for the first year were insufficient, and remedying the issue required much-needed capital.

Funding, Funding, Funding

To identify a gap in the market and establish a viable solution can be done at a relatively low cost at the initial stage of capital investment. However, once the threshold is crossed, and the product or service is built, growth and expansion would require more funding.

Finding investors or lenders for your startup is the challenging part. Did you know that only 0.5% of startups are successful in raising a VC funding round? Traditional lenders are not interested in backing a startup. As a company, we have faced repeated rejection simply because our business is new. We have been advised to come back with three to five years of trading history, which cannot be achieved without adequate funding. Moreover, the small pool of lenders willing to help startups often offer unrealistic interest rates, up to 20%.

As a vibrator brand, we have faced and struggled with the backward attitude of many lenders, like others in the industry. Despite the sex toy industry’s popularity and size, investors are hesitant about backing sex toy startups. Due to the overarching stigma that adult businesses, including sex toy manufacturers, face, it’s challenging for pleasure brands to open a business bank account or access lending facilities.

Pausing a startup until sufficient capital is secured is rarely a good idea. Investors want to see that the business is leaving regardless of investment support. This is where investors want to team up with a startup. Even potential investors who are not wary of the industry or do not conform to the backward “sex is taboo” notion of the past may still hesitate to invest if tangible progress is not demonstrated.

What options are out there?

Researching every funding option is crucial when finding the right fit for your business. There is no one-size-fits-all solution, and your venture’s specific needs will dictate what to pursue.

Non-traditional banks have emerged as a new trend in lending to startups. However, they only lend against B2C sales. This type of lender is ideal for businesses solely focused on funding their B2C stock.

Government funding is also available to those who have exhausted other funding avenues. If you're struggling to find options, it might be a potential avenue to pursue.

The sex toy industry is incredibly lucrative, maintaining its upward trajectory and achieving significant global growth. However, most investors fail to see its potential for return on investment. Mainstream retailers, such as Urban Outfitters, Sephora, and Superdrug, have adopted a progressive mindset by tapping into the pleasure industry, yet this way of thinking has yet to filter down to lenders. Despite this, we are hopeful for a shift in perceptions to come in time.