First Round: Rampant capitalism

First Round would hate to come across as being a prudish, unworldly sort of magazine intro section. But it couldn’t help being slightly dismayed to learn in February that one US private equity firm appears to be on an acquisition drive in a consumer segment somewhat beyond its ken.

Diamond Products, a platform business created by US mid-market firm Brookstone Partners, splashed out an undisclosed sum on JimmyJane, a US company that “designs products and experiences to provide pleasure, strengthen connection and create provocative possibility” – which in layman’s terms, appears to mean ‘eye-wateringly expensive sex toys’ (if eye-watering isn’t a bad choice of adjective in this context).

In other words, Brookstone is using Diamond to do what can only be described as a sex toy roll-up – with JimmyJane (apparently known as ‘the Apple of sex toys’ because of its admirable design aesthetic) hooking up with Diamond’s original business Pipedream, another adult toy-maker.

Now First Round is fully prepared to believe that this is, erm, a growth area. Apparently, $15 billion-worth of said toys are sold every year. And it has no reason to doubt the investment acumen of Brookstone, which according to its website has “returned in excess of $1.25 billion to our partners and investors since 1996”. (OK, so it does insist on using the term ‘goal congruency’, but nobody’s perfect).

But here’s the thing. How are First Round and its fellow zealots supposed to spread the private equity gospel to unbelievers if GPs insist on buying companies that we’re too embarrassed to talk about in front of our mothers?