Kate Batz, Сo-Founder of FemTech Analytics
Dina Niron, CEO & Founder of Organa
In this article, Kate Batz, a co-founder of FemTech Analytics (“FTA”), a strategic analytics agency focused on the emerging FemTech sector, and Dina Niron, CEO and founder of the sexual wellness platform Organa, would like to explore SexTech as a subsector of the Sexual Health segment of FemTech.
FTA defines “FemTech” as technology empowering women’s health and well-being. “FemTech” includes products, services, applications and software, medical devices, telehealth, wearable, hardware, therapeutic drugs, vitamins and supplements, digital platforms and consumer products designed to improve or support women’s health.
On a more granular level, FTA’s FemTech classification encompasses ten (10) segments: General Healthcare, Sexual Health, Menstrual Health, Reproductive Health & Contraception, Pregnancy & Nursing, Pelvic & Uterine Healthcare, Menopause Care, Mental Health, Women’s Longevity and Women’s Wellness, as further shown in the below diagram:
Source: FemTech Analytics
Pursuant to the above classification, Sexual Health segment focuses on the physical, emotional, mental, and social well-being related to sexuality, sex and intimate hygiene.
According to NIH, about 10% to 15% of women have never had an orgasm and surveys suggest that up to 50% of women are not satisfied with how often they reach orgasm.
Despite these startling statistics, the Sexual Health subsector is traditionally underfunded (1.6% of total FemTech funding) compared to such leaders of FemTech as Reproductive Health & Contraception (16%) and Pregnancy & Nursing (13%). However, as of Q2 2023, there is a noticeable positive trend with a 50% increase in the number of Sexual Health companies (to 177 total according to the FTA database) when comparing 2021 data with Q2 2023 as further depicted below.
Global FemTech Industry Landscape, Q2 2023
Source: FemTech Analytics
Total Funding in FemTech by Subsectors, Q2 2023
Source: FemTech Analytics, Crunchbase
In terms of regional distribution of Sexual Health companies, as of Q2 2023, the United States leads in this category with 61 companies, followed by the UK, Singapore, France and Australia.
Regional Distribution for Sexual Health Companies, Q2 2023
Source: FemTech Analytics
The United States also leads in terms of the amount of funding ($260M), followed by Hong Kong ($39M), the UK ($19M), the Netherlands ($9M) and Singapore ($6M). As for the product types prioritized by such companies, most of them focus on consumer products, devices, digital platforms and apps and software as further shown below.
Sexual Health: Number of Companies by Product Type, Q2 2023
Source: FemTech Analytics
Regarding the revenue range, the majority of the Sexual Health companies bring between $1-10M, followed by entities earnings less than $1M per annum.
Distribution of Sexual Health Companies by Revenue Range, Q2 2023*
*Examples of companies. Source: FemTech Analytics
We would like to now focus on the SexTech segment of Sexual Health. Dina Niron, Founder of Organa, which aims to improve global health by boosting women’s sexual wellness and pleasure, defines “SexTech” as technology and technology-driven ventures that are designed to enhance or innovate human sexuality and/or the human sexual experience. By utilizing technology for education, prevention and pure pleasure purposes, women are encouraged to explore and enjoy new devices, services and products designed to remove thousands of years of shame and taboos.
The diagrams below illustrate the distribution of SexTech companies by country and by amount of funding by countries:
Source: FemTech Analytics
Top 10 Most Funded SexTech companies ($M), Q2 2023
Source: FemTech Analytics
The SexTech industry didn’t really exist prior to 2018, and not due to a lack of need. The US Patent and Trademark Office (US PTO) granted Patent 6,368,268 B1, better known as "The Teledildonics patent" in 1998, which was overly broad for any vibrator operated by a computer, and had significant legal implications. This patent's broad scope led to a rise in legal issues involving patent trolls, which aggressively searched for start-ups operating in the SexTech sector that unknowingly infringed on the patent, resulting in lawsuits demanding licensing fees, often at outrageous rates, or threatening legal actions.
Only a handful of companies chose to pay the licensing fee, most could not bear it and were driven out of business. As a result, this patent effectively eliminated the development of new technologies, features, and designs and any potential innovation in the industry for many years. Such was the case of TZU Technologies, LLC which purchased patents and prosecuted the following companies for the sole purpose of suing for IP infringements:
Kickstarter, for hosting the project
Comingle, Makers of the crowdfunded The Mod arduino vibrator
Holland Haptics, Makers of the Freeble remote hand-holding device
Vibease, Makers of the vibease bluetooth controlled toy
Winzz, LLC, Makers of the LovePalz teledildonics toy
Frixion, Makers of the Novint Falcon based Frixion toy and teledildonics cross-platform software
Internet Services, LLC and WMM Holdings Maker of The Real Touch toy.
However, with the expiration of the patent in 2018, the SexTech industry experienced a transformative shift. The absence of the patent's restrictive claims allowed for the development of innovative sexual wellness products and services. From sexual content, erotic Apps and websites to smart vibratos operated by Apps and fitted to female bodies and needs.
Notably, this sub-sector has seen a significant presence of female founders, accounting for approximately 70% of the SexTech entrepreneurs, indicating the major need for innovation in this space and a shift towards greater gender diversity in the industry.
While the expiration of the patent brought significant opportunities for innovation and growth, financial challenges persist within the SexTech industry. Many investors still regard sexual wellness as taboo and banned under the so-called “Vice Clause'' which prevents investments in tobacco, gambling, sex, and weapons.
As SexTech continues to grow and evolve, startups in this space must navigate the murky waters of financial challenges, advertisement restrictions and privacy and data protection laws to ensure their success. To address these pressing needs, the following solutions can be potentially implemented:
Public funding should be allocated to SexTech;
Public education on the subject;
Removal of pertinent marketing restrictions, especially on social media channels;
Categorizations: establish clear definitions for different types of SexTech products and services, based on their intended use, such as educational, therapeutic, or entertainment;
Age Verification: implement robust age verification mechanisms to prevent minors from accessing inappropriate content or products;
Privacy and Data Protection: ensure users' intimate data is treated with the highest level of security and anonymity - companies should provide transparent information about data collection and usage, and obtain explicit consent from users;
Ethical Considerations: establish guidelines to address ethical concerns such as consent, representation, and potential exploitation.
About the authors
Kate Batz, FemTech Analytics
Kate Batz is the Managing Partner of Longevity Capital, the investment platform of Deep Knowledge Group, a leading consortium of Deeptech and frontier technology-focused subsidiaries as well as the Co-Founder and CEO of FemTech Analytics.
In 2021, startled by insufficient attention to health needs specific to women, Kate co-founded FemTech Analytics, a dedicated subsidiary focused solely on female health and the emerging FemTech sector.
Dina Niron, Organa
Dina is a serial entrepreneur with a passion for innovation and driving impact. She held executive management positions, acted as CEO for early stage companies, and led numerous JV's and M&A transactions.
With over 9 years working in Wall-Street, Dina has extensive strategic experience consulting companies on business models, growth and fundraising.