“Sex does not sell in Silicon Valley”: Why venture capitalists don't want to touch sex start-ups

Online porn is huge, but getting people to publicly rally around funding for an adult content site is not easy

Published January 19, 2016 11:58PM (EST)

  (<a href='http://www.istockphoto.com/profile/ericcote'>ericcote</a> via <a href='http://www.istockphoto.com/'>iStock</a>)
(ericcote via iStock)

This article originally appeared on AlterNet.

AlterNetOnline porn is staggeringly popular. According to PornHub’s analytics team, 4,392,486,580 hours of porn were watched on the site in 2015. Over 87 billion videos were viewed during the 21.2 billion visits it received last year. That’s 12 videos viewed per person on Earth, they note. People love sex—or at least they love watching it. So it makes sense that many would-be entrepreneurs have taken the record level of Internet interest in it as an indication that it's a good time to go into the business. But before you quit your day job, you should know that surviving the world of sex tech is not nearly as easy as it sounds.

Just about any new business requires a web presence to survive and access to the usual tools of business. But those who deal in adult content have been hit with a storm of unexpected hurdles. Web servers won’t host their content. Credit card operators won’t work with them for fear of chargebacks (“No honey, of course I didn’t rent Backdoor Sluts! I’ll give them a call”). Alternative methods of payment, such as PayPal, are off limits too. Banks refuse to provide these entrepreneurs with business bank accounts and companies like MailChimp, which manage membership emails, refuse to service any business based in porn.

Crowdfunding is one way to get funding, but not one that tends to work out. Cindy Gallop, founder of Make Love Not Porn, a company that helps highlight the differences between sex in porn and sex in real life, says of the crowdfunding platforms that do allow adult content, certain forms seem more welcome than others. Wanna sell sex toys? Sure. Videos of people having sex? Not so much.

“The biggest problem is that successful crowdfunding requires a very large amount of people willing to very publicly rally around something," Gallop told AlterNet. "And to very publicly spread the word and invite other people into it. People publicly rally around a piece of hardware, video game or movie concept. They will not publicly, in large numbers, rally around anything to do with sex.”

That means those working in the world of adult content are left with few options. Venture capitalists are the usual sources to turn to for funding, but as Gallop explains, they tend to get uncomfortable when it comes to matters of sex. “There are too many stakeholders,” she says.

Gallop explains the main obstacle that presents itself with this group is what she calls “the fear of what other people will think.” That phenomenon has a tendency to pop up around porn.

Gallop told us about one investor who, while a fan of her work, was hesitant to get involved. “At the end of the day, it’s not what I think,” he said. “It’s about what every other partner in my firm will think and what every investor in our fund will think.”

ESG (environmental, social and governance) investments have become hugely popular areas of interest in terms of both sustainability and ethics in investing. Often, these areas fall under the umbrella of socially responsible investing. Sex, no matter how enlightened or progressive the business might be, rarely makes it into this camp.

Areas associated with activities that could be considered unethical or immoral, like gambling, tobacco and porn are called "sinful investments" (although you don't see investors hesitating to associate with huge casinos). And a lot of firms have "sin clauses" in their contracts that prevent them from even going there. But it’s possible that certain depictions of sex might not deserve the sinful label they’re so often assigned. “What we’re trying to do with Make Love Not Porn, what we’re tackling is what lies at the heart of so many societal ills and evils,” says Gallop.

“Shame and embarrassment about sex is what lies at the heart of rape culture, sexual abuse, sexual violence, sex trafficking," Gallop continues. "I’m all about going right to the root cause. Drill down and go way beyond what the apparent issue is and find out what's really causing it. When we take the shame and embarrassment out of sex, we solve so many things that make human lives enormously unhappy. It’s a very difficult task to get people to understand that.”

Those involved in the largely testosterone-driven teams in investment hotspots like Silicon Valley might want to think about the PR perks involved in joining that conversation. Unfortunately, as journalist Alex Mayyasi points out, the place is full of prudes. “Sex does not sell in Silicon Valley,” he writes. But while sex may not sell, sexual harassment is hugely prevalent. Some 60 percent of women in Silicon Valley say they have experienced sexual harassment, according to one report.

Funding for Gallop’s vision will most likely come in the form of private wealth. But even that path can be fraught. Chance Collins, president of SlotSeduction, a platform that allows registered players to play slots with "sexy girls" and use their winnings to download exclusive videos, photos and wallpaper, told AlterNet via email, “Almost everyone you first approach will have an incorrect vision of what you are trying to build. Most of the people I first went to for investment wanted a company with a lot of pretty girls around for them to get to know… They either want to put the minimum investment in to gain ‘access’ or they are scared to associate with the adult industry.”

Gallop suggests we look at Make Love Not Porn not as a sex site, but a social sharing platform. Think about the enormous success other social networking sites like Facebook and Instagram have experienced. If people enjoy frequenting these sites as much as they like watching porn, merging the two ideas might make some sense. It's like keeping tabs on that kid you went to high school with, but in a much more entertaining way. And who knows, seeing more authentic forms of sex might end up doing us some good.

People are starting to flood into other investment areas once considered sinful, like cannabis and bitcoin. As Gallop explains, that money allows those people to fund lobbyists, bring about regulation change, start public education initiatives, foundations and more. “We need those in sex tech, because we need a different legal definition of adult content,” she insists

“At Make Love Not Porn, we are adult content that has a social benefit, adult content that is utterly transparent, ethical, legal, honest within every possible way. And yet, there's a clause in every single term of service across every single piece of infrastructure we want to use, blocks us from it.”

Carrie Weisman is an AlterNet staff writer who focuses on sex, relationships and culture. Got tips, ideas or a first-person story? Email her

By Carrie Weisman

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