Rethinking Returns: Embracing Human Contradictions in Investment

At SXSW London, impact investor and advisor Christian Tooley asked a provocative question: What if investors embraced human contradictions to create change beyond financial returns? He challenged the norms of traditional venture capital, especially the restrictions known as “vice clauses” — limitations that prevent funding for sectors like sex, drugs, gambling, and tobacco.

The Cost of Playing It Safe

Vice clauses are typically imposed by large institutional investors—such as pension funds and endowments—who want to avoid reputational risks and legal complexities. But Tooley believes that by avoiding these controversial sectors, investors are missing out on some of the most innovative opportunities.

“Returns can be financial, cultural, and systemic,” Tooley said. For example, sex tech is a high-volume, consumer-facing industry with relatively low upfront capital needs. Psychedelics and other substances may have a longer ROI timeline but offer potentially larger payoffs.

Innovation in Taboo Sectors

Tooley emphasized that avoiding investment in these spaces is often more about stigma than true risk. Take sex tech: the market is projected to reach nearly $200 billion by 2032, yet it has attracted only modest funding. Specialized firms like Vice Ventures have tried to change that, but mainstream investors remain hesitant.

Even massively successful platforms like OnlyFans struggled to find investors due to associations with adult content. “Entire industries are underfunded not because they lack merit,” Tooley told TechCrunch, “but because they challenge comfort.”

Real-World Examples of Vice Investing

Tooley himself has invested in companies like Polari Labs, which is working on improving anal sex health, and linq, a platform focused on secure nude-sharing. These may seem niche or provocative, but they serve real human needs—ones that are often overlooked due to societal discomfort.

In the case of cannabis, although legal in several U.S. states, its federal illegality creates hurdles in tax policy, regulation, and perception—discouraging institutional investment despite its proven market potential.

A Gap—and an Opportunity—for Smaller Investors

Tooley pointed out that the absence of large investors opens the door for family offices, smaller LPs, and progressive funds to support these areas. “If you only focus on the perceived controversy, you miss the innovation—and often, the returns too,” he said.

He argues that this kind of investing isn’t just about financial gain. It’s about pushing boundaries and funding products that improve lives—especially in areas society still finds hard to talk about.

Challenging the Status Quo

Once-taboo topics like menstruation are now part of the mainstream, thanks to venture-backed companies like Flo, femble, and WomanLog. Tooley imagines a future where this openness extends to queer and trans health, sexual wellness, and culturally grounded psychedelic therapies.

“We don’t just need funders comfortable with risk,” Tooley concluded. “We need ones deeply uncomfortable with the status quo.”