There is a lot of money to be made from pornography on the Internet. But the industry has an image problem. A young startup from Berlin wants to change that with fairly produced porn, erotic radio plays and workshops. The catch: Many donors are still shy.
The porn industry not only has an image problem, many founders of erotic startups also face another challenge: most institutional venture capitalists exclude transactions with pornography in their guidelines.
Neither one nor the other stopped Denise Kratzenberg and Maximilian Horwitz from founding the sexual wellness platform Cheex two years ago, a streaming service for fairly produced porn, audio content and education. The Berlin start-up has some of the contributions produced exclusively by external teams. After completing a seed investment in the seven-digit euro range in April 2021, entrepreneur and moderator Tijen Onaran also invested almost 50,000 euros in the startup this week.
Creating a new, liberated image of sexuality – that is both the founding idea and the claim of Denise Kratzenberg and Cheex.
“Porn and sexuality shouldn’t only be conceived and made by men – the female perspective is clearly missing here,” Onaran explains her investment in ntv.de. In addition, the circle of investors at Cheex has so far been more male than female. “Here I just want to set an example and not leave the issue to the men.” With its offer, Cheex is not only aimed at women. With 70 percent, users are the majority of the 100,000 subscribers.
Cheex generates a seven-figure turnover
“Just like men, women are also interested in their own sexuality and pornography. But many don’t find access to it because the topic is still very shameful in society,” says founder Kratzenberg ntv.de. Cheex stands for equality and the platform makes sure that not only the man is the focus, but that the lust of the woman is also recognized. Users pay between 9.90 and 14.90 euros per month for authentic porn films, radio plays and workshops in which, for example, anal intercourse is explained.
Onaran doesn’t think the statutes that prohibit venture capitalists from investing in pornography are up-to-date. After all, the porn industry must also change its perspective. “I’m not at all drawn to other platforms and want to consume films and audiobooks that I know are inclusive, diverse and sustainable,” says Onaran. The Cheex business model could bring about real change through its investment in an absolutely male-dominated industry.
Last but not least, Onaran was convinced by the company’s figures: According to its own statements, the start-up now generates seven-digit sales per year. It’s no secret that there’s a lot of money to be made from pornography on the internet. Estimates assume worldwide annual sales of more than 35 billion dollars. However, Cheex is not yet profitable. “We could be in the black starting tomorrow if we wanted to. But we’re still investing heavily in growth,” says Kratzenberg. However, the startup will break even in the next few months.
“Sexuality affects everyone. That’s why investors understand the demand and the product. It’s not difficult to convince people of our business model,” says Kratzenberg. The founder is observing a paradigm shift in the scene and assumes that the strict guidelines that have so far prohibited venture capitalists from investing will soon break.
Cheeks struggles to keep up with Pornhub
The fact that Cheex can only rely on private individuals when looking for investors not only slows down the start-up’s growth, but also limits the amount of the financing rounds. In contrast to financially strong funds, business angels often have less money at their disposal. Everyone in the industry struggles with the same difficulties. In contrast to the booming Blitz delivery services, for example, Kratzenberg is convinced that many providers can coexist. “Cheex does not necessarily have to be a market leader to be successful.”
This goal is probably utopian anyway. On Pornhub, the market leader for adult videos, people watch more than 100 billion videos a year. It’s hard for a startup to keep up. But the billions of views are not necessarily a success factor for Kratzenberg, it’s not about the masses.
The big difference to other providers is that Cheex curates its offer. The startup makes sure that the performers are of legal age, are paid fairly and everything is done amicably. There isn’t that much of that at the moment. “We don’t want to compete with user-generated platforms like Pornhub,” says Kratzenberg. The product aims to ensure that users feel comfortable with their own sexuality and can watch porn without a guilty conscience.