Recently I was approached by a startup founder who asked me, “What are your top 3 learnings to raise seed for sex tech?”

A deep breath. My thoughts drifted to how I could answer the question with encouragement instead of bluntly telling them, “the biggest thing I’ve learned is that startups have a challenging time raising capital.”

Capital is Tough for Everyone (It’s not just you)
Startups in the mainstream also struggle a lot. There are multitudes of companies that fail because they can’t raise capital. Or, they raise money and then cannot raise more. Lack of capital is listed as a reason for failure for 29% of mainstream startups surveyed in a recent study.

That is why most founders rely on cash savings, friends, family, and other high-risk ways of funding their startups (like credit cards – yikes!)

Private equity does find its way into adult. Some notable companies were accelerated with large amounts of private equity (Mindgeek, Reporo), but those are outside exceptions, not the rule. But, you should consider almost every venture capitalist and institutional investment fund “out” if there are boobies involved. It taints their entire portfolio, and banks don’t like it, either.

Seek out investors who are a good fit and interested in your vision. You will only raise from mainstream VCs if they are interested in adult, no matter how great your product is or how many billions you say you’re going to make. It doesn’t matter. What matters is finding investors from people who want to invest in what you want to do. [Continue Reading in XBIZ Magazine]