CEO Tips: Ten Ways to Finance and Fund Your Adult Entertainment Business

The adult entertainment business can be a very attractive option for individual entrepreneurs. Despite the massive demand for adult content and services, large corporations seldom touch porn directly, which makes it possible for a relatively small company with modest funding to achieve relatively big things.

That mainstream squeamishness though also means that finding a source of funding can be tricky.

Business funding can be crucial for any entrepreneur or business owner who wants to get started or get bigger, so what are your options when your grand plans involve the adult industry? How can you get funding for your adult business? Whether you’re a small business owner or a startup founder, you have a variety of options for raising funds – although each option will come with challenges unique to the adult industry.

#1 | Self-Funding Your Business

Self-funding an adult business is a popular option for entrepreneurs who want to maintain control over their company and avoid taking on debt. This method involves using your personal savings, investments, or assets to finance the business. The good news here is you retain full ownership and decision-making powers over your business. Additionally, self-funding can be a more flexible option, as there are no strict requirements or obligations to repay loans or meet investor expectations. You also won’t have to worry about explaining the adult nature of your business.

That said, self-funding a business also comes with its challenges. It requires a significant amount of personal capital, which may not be readily available for everyone. Entrepreneurs who choose this route often have to make sacrifices and cut back on personal expenses to accumulate the necessary funds. Self-funding can also limit the growth potential of a business, as there may be a cap on the amount of capital that can be invested.

For those who are able to self-fund their business, it can be a rewarding and empowering experience, especially for those who desire absolute control. That’s why self-funding is perhaps the most popular choice for adult industry businesses.

#2 | Friends and Family

Funding through friends and family is a common practice for adult businesses, especially start-ups. It can be an attractive option because it allows the business owner to secure funding without having to go through traditional lenders or investors, most of which would be a difficult sell for adult business models. Friends and family members are often more willing to take a risk with someone they know and trust, may be more flexible with repayment terms and interest rates, and often are easier to talk with about an adult-oriented business.

As with all options, there are some potential drawbacks to funding a business through friends and family. One of the main concerns is the potential strain it can put on personal relationships, which isn’t a small consideration. Mixing business and personal matters can sometimes lead to conflicts and disagreements, especially if the business does not perform as expected. Additionally, relying solely on friends and family for funding may limit the amount of capital available, as they may not have the same financial resources as traditional lenders or investors.

#3 | Bank Loans

Funding an adult business through bank loans can be an extremely challenging process due to mainstream attitudes about the industry. Banks are often hesitant to provide loans for businesses in the adult sector due to the perceived risks and potential legal issues. It’s not impossible to secure funding through traditional banking channels, but odds are not in your favor.

To increase the chances of obtaining a bank loan for an adult business, it’s important to present a well-researched and comprehensive business plan. This plan should outline the market potential, target audience, revenue projections and strategies for mitigating risks. Additionally, having a solid credit history and collateral can also help in convincing banks to provide the necessary funding. It is crucial to approach banks that have experience working with adult businesses or are open to financing ventures in controversial industries. Avoid big mainstream banks like Wells Fargo or Chase who have a history of discriminating against adult businesses.

# 4 | Angel Investors

Funding through angel investors is one of your better options if you need to raise a lot of money for an adult business. Angel investors are high net-worth individuals who provide financial support to startups and early-stage businesses in exchange for equity or ownership in the company.

These investors are often experienced entrepreneurs themselves who can bring valuable knowledge and connections to the table. It’s important to note however that many (if not most) angel investors aren’t comfortable investing in adult businesses. If you’re seeking funding from angel investors for your adult business, research and approach investors who have a track record of investing in similar ventures. You can also look into sites like fundable.com to help you put some hooks in the water, so to speak.

As with banks, be prepared to present a compelling business plan to potential angel investors that outlines the potential for growth and profitability. This includes providing detailed financial projections, market analysis, and a clear strategy for how the funds will be used to achieve business objectives. It is also important to address any potential concerns or risks associated with the adult industry, such as legal and regulatory challenges. Building a strong relationship with angel investors based on trust and transparency is crucial, as they will likely want to closely monitor the progress of the business and may provide guidance and support along the way.

#5 | Venture Capital

Venture capital firms invest in startups and early-stage companies with high growth potential. They provide capital in exchange for equity and often take an active role in the company’s management. Venture capital funding can be a significant boost for startups but usually comes with high expectations and a loss of control for the founder.

Funding an adult business through venture capital can be a complex process for all the reasons mentioned earlier with other forms of funding. That said, there are still opportunities for adult businesses to secure venture capital funding, it’s difficult but not impossible.

One approach is to focus on positioning the business as a technology or media company that happens to operate in the adult industry. By highlighting the innovative aspects of the business, such as advanced online platforms or cutting-edge content creation, entrepreneurs can attract venture capital investors who are more comfortable with technology-driven ventures. Additionally, demonstrating a strong understanding of the market and a clear plan for growth and profitability can help instill confidence in potential investors.

Another strategy is to seek out venture capital firms that specialize in the adult industry. Finding these firms may be difficult, but if you attend adult business conferences and events, you may be able to find investors who are comfortable with the industry. You also should participate in any online forums that cater to the adult business and get comfortable with using LinkedIN as part of your daily routines.

#6 | Crowdfunding

Crowdfunding platforms, such as Kickstarter (doesn’t allow adult) and Indiegogo (does allow adult), help entrepreneurs to raise funds from a large number of individuals. This method involves presenting your business idea or product to potential backers who can contribute varying amounts of money towards your goals. Crowdfunding can be an effective way to validate your idea and generate early customer interest.

Funding an adult business through crowdfunding can be a clever and effective way to raise capital without the hassle of pearl-clutching banks or big investors. By creating a compelling campaign and offering unique rewards or incentives, adult businesses can engage with a wide audience and generate financial support, often directly from fans. Crowdfunding allows entrepreneurs to tap into a community of like-minded individuals who are interested in supporting the adult industry and its growth.

So, what’s the catch? Some mainstream crowdfunding platforms have restrictions on adult content, which can limit the options available to you. It is crucial to carefully research and select a crowdfunding platform that is open to adult businesses and aligns with their specific needs – try searching the service to see if there are other adult listings. Additionally, be prepared to navigate potential legal and regulatory considerations associated with crowdfunding in the adult industry, as different jurisdictions may have varying rules and restrictions.

Overall, crowdfunding can be a valuable funding option for adult businesses, but it requires careful planning and consideration of the unique challenges and opportunities within the industry, as well as crafting a compelling pitch that captures the imagination of investors.

#7 | Grants

Grants are non-repayable funds provided by government agencies, foundations, or corporations to support specific projects or initiatives. These funds are typically awarded based on specific criteria, such as industry, location, or social impact.

Are there grants open to adult businesses? Not likely. We’re including this category for the sake of being thorough but finding a grant for your adult business could be next to impossible. There are some grants available for woman-owned businesses, as well as minority-owned businesses, and you might be able to qualify if your business is, at its core, a technology business as opposed to an adult content business. Still, you may not want to spend too much time looking for grants if you plan to have any connection to the adult industry. Should you decide to take a look, NerdWallet has an excellent listing of possible sources of grants.

#8 | Business Incubators and Accelerators

Business incubators and accelerators provide startups with funding, mentorship, and resources to help them grow. These programs often require a competitive application process and offer a structured environment to develop your business. In addition to funding, they provide access to mentorship, networking opportunities, and funding options. By joining an incubator or accelerator, your businesses can tap into a community of like-minded individuals and experts who understand the unique challenges and opportunities of running a business. This can, in theory, help you navigate regulatory hurdles, develop a solid business plan, and secure the necessary funding to launch and grow your business.

Once again, you’re not likely to find any of these programs that specifically admit adult businesses. Is there a way around it? Perhaps, if the business that you want to develop also has mainstream implications that are compelling enough on their own to get you in the door.

#9 | Corporate Partnerships

Funding an adult business through corporate partnerships can be a strategic and mutually beneficial arrangement and is one of the more common methods of funding an adult business. By partnering with established adult companies, you can gain access to financial resources, industry expertise, and a wider network of potential customers. Corporate partners may provide funding in the form of direct investments, sponsorships, or joint ventures, allowing you to expand your operations, develop new products or services, and reach a larger audience.

In addition to financial support, corporate partnerships can also offer valuable marketing and promotional opportunities. By aligning with reputable brands, you can enhance your credibility and gain exposure to new markets. Corporate partners may provide access to their customer base, distribution channels, and marketing platforms, helping your adult business to increase its visibility and attract more customers. Furthermore, these partnerships can facilitate collaborations and knowledge sharing, allowing the adult business to tap into the expertise and resources of established companies to drive innovation and growth.

#10 | Alternative Financing

Alternative financing options, such as peer-to-peer lending, invoice financing, or revenue-based financing, have gained popularity in recent years with mainstream businesses. These methods provide access to capital outside of traditional banking channels. However, they often come with higher interest rates or fees, and can be extremely difficult to secure for someone with an adult business model.

Now that you understand the most common sources of business funding, make a list of which options above seem the most promising to you. As shown, each funding option has its own advantages and considerations, but you know your business best so evaluate your specific needs and goals before deciding. Also, plan to stay at it consistently for a sizable period of time. Remember, if securing funding for an adult business was easy, everyone would do it.