Impact investor and advisor Christian Tooley posed a thought-provoking question at SXSW London last week: What if investors prioritized profit over societal norms? Tooley’s focus was on vice clauses, the restrictions imposed by limited partners on venture firms to protect their investments.
These restrictions often exclude sectors such as sex, substances like psychedelics, gambling, and tobacco. Large institutional investors typically enforce these limitations to avoid controversy and potential harm. However, Tooley believes that by avoiding these so-called vices, investors may be missing out on innovative opportunities.
Tooley argued that investments in sectors like sex and substances could yield financial, cultural, and systemic returns. For example, the sex tech market is projected to reach nearly $200 billion by 2032. Despite the potential for profitability and positive societal impact, some startups in these industries struggle to secure funding due to social stigma.
As an investor, Tooley has supported companies like Polari Labs, which aims to enhance anal sex experiences, and linq, a platform for safe nude sharing. While institutional investors may shy away from these controversial categories due to legal and reputational risks, Tooley sees potential for smaller LPs, family offices, and progressive funds to capitalize on less competitive markets.
Tooley emphasized the importance of challenging the stigma surrounding taboo industries. He highlighted the growth of venture-backed companies in once-taboo sectors like menstrual health, with examples such as Flo, femble, and WomanLog. By supporting companies in controversial areas, Tooley envisions a future with improved sexual health tools, nuanced psychedelic therapies, and biohacking solutions tailored to marginalized communities.
In a world where comfort with risk is not enough, Tooley advocates for investors who are willing to disrupt the status quo. By embracing innovation in overlooked sectors, Tooley believes that investors can drive positive change while also achieving financial success.
