Australia's femtech and sextech sectors go under the radar

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There's a multi-billion dollar trend taking hold in the start-up space, but if you're in Australia you may not have heard about it.

Start-up founders in the "femtech" and "sextech" sectors say there's more consumer demand than ever for companies that build products that solve problems for women and feminist audiences.

"In a few years time, we may see femtech as one of the most crucial categories investors are backing," says serial entrepreneur and head of pre-accelerator Atto, Kate Kendall.

Momentum is building. Last year Frost& Sullivan predicted the femtech sector, which covers a range of companies including fertility apps and menstrual health businesses, would hit $US50 billion ($70 billion) by 2025.

The neighbouring sextech sector, which covers everything from sexual health apps to technologies for the adult industry, is also predicted to be worth more than $US30 billion to the global economy.

Australian entrepreneurs in both of these spaces have one observation in common: their start-ups are set to take flight in coming years, but investor and consumer knowledge about their sectors is stronger outside of Australia.

New York calling

Sydney entrepreneur Siena Dixon has spent the past year launching menstrual health business Bootsy, which has found a home in New York after Dixon invested $25,000 in start-up costs.

The company has sourced and developed a dietary supplement based on the chaste tree berry, a plant grown across the Mediterranean that is promoted as helping period pain.

"We fit into femtech and we're in the e-commerce space. It’s been blowing up at the moment, it’s been very helpful for me," Dixon says.

Bootsy Health has found a strong trend in the US towards businesses that promote frank discussions about women's health.

The business, which is on track for a turnover of $200,000 based off its first run of products, will look for external investment in the first months of this year — and it will be doing it in New York.

Dixon says that while there's awareness of these types of companies in Australia, femtech brands like US founded period underwear business Thinx are "steering the conversation in the right direction" in the US market.

Pitching to male investors

Other entrepreneurs based in Australia say pitching these types of companies here has traditionally been challenging because female founders are almost always pitching to male investors.

"Seeking funds for femtech-related ideas is not easy, because you are presenting to mainly male investors, many of whom can’t relate or find it uncomfortable even discussing the feminine related topics like menstruation," founder of $3 million leakproof underwear brand Modibodi, Kristy Chong, says.

Kendall believes it will be easier to raise funds "as soon as an exit happens" which will show the potential growth opportunities in this sector.

Kate Kendall, serial entrepreneur and head of Atto accelerator.
Kate Kendall, serial entrepreneur and head of Atto accelerator.

In the mean time, she says for the businesses she works with in the accelerator phase, she'll suggest looking outside of venture capital to crowdfunding and other options.

"It's not all about working with VCs," she says.

Sextech companies search for investment

Technology businesses working on tech solutions for the adult industry say their inventions are also generating traction.

Sex industry blockchain business Intimate is about to launch a pilot of its payment system this week.

Intimate raised more than $4 million last March and ended up with more than 8700 Ethereum raised across 2018, in a token offering to launch its cryptocurrency-focused payments platform for the sex industry.

The start-up aims to provide secure and private payments in a sector where privacy and safety are key for workers and consumers, but traditional payments channels often aren't an option.

Intimate co-founder Leah Callon-Butler.
Intimate co-founder Leah Callon-Butler. CREDIT:WOLTER PEETERS.

Co-founder Leah Callon-Butler says there is plenty of global movement in the technology sector when it comes to everything from sex education to women's health.

But chasing investment via traditional channels can be an "uphill battle" for female founders in the space.

Among her peers, many local founders in this space have relocated to the US to launch sextech companies, she says.

"There seems to be a lot more founders in New York, and they've moved there for the opportunity."

Co-founder of Melbourne-based start-up Assembly Four, Eliza Sorensen, says Australia also has to take a tough look at its reluctance to invest in certain spaces.

The bootstrapped business has invested more than $100,000 to launch products including an ethical advertising platform and a social media site for workers in the sex industry.

Sorensen says the business is best described as "feminist" rather than femtech, but agrees businesses working on these kinds of projects already face the barrier of female founders securing less funding than their male counterparts.

Assembly Four co-founders Jack Chen, Eliza Sorensen and Lola Hunt.
Assembly Four co-founders Jack Chen, Eliza Sorensen and Lola Hunt.

"I think we have a significantly less mature VC space to choose form, and I think that shows."

Potential early stage investors have told Assembly Four they believe their ideas have legs, but they are reluctant to follow through because of the nature of the business.

"We've made it pretty far in the process [of discussing funding]," Sorensen says.

Those looking to support the business in its earliest stages have told the founders "it's just not going to happen", Sorensen says.

Assembly Four, which is still pre-revenue, is considering overseas markets but would like to to stay based in Australia.

"It’s quite unfortunate – we want to have our money and company in this country, but it's difficult," Sorensen says.

"At the end of the day, we’re developing thoughtful technology."

Source: TheAge