Dirty Sexy Money

Is porn recession-proof?
More
John Cuneo

“Stick your money with us. Let us invest it. When the market turns around, come back and get it,” Francis Koenig says, sipping his chilled Labrusca at a Midtown Manhattan restaurant. In troubled times, a pitch for a safe bond fund, perhaps? Bondage might be more like it. Koenig is the founder and CEO of AdultVest, which he bills as the adult-entertainment industry’s first hedge fund, and according to him, he’s doing just fine. His fund (with a mix of public and privately held assets) is up 50 percent this year, he says, based on “very conservative” outside appraisals.

In theory, depressed financial markets signal a buying opportunity, but Koenig believes that investors are now more cautious. Instead of seeking assets that are “on sale,” they’re looking for fundamentally different opportunities—which AdultVest is poised to deliver. “I had a meeting last night with about 15 major players,” Koenig tells me. “All of them were very interested in the deal, and I believe about half of them will actually invest.” Koenig wouldn’t reveal the project to be financed, and he danced around names, saying only that I would recognize them—a coyness that, to be fair, both hedge funds and adult entertainment share. He says he met many of them at the Alternative Investment News Hedge Fund Industry Awards last June, when AdultVest won Hedge Fund Launch of the Year. (Other honorees included the Blackstone Group and the Teacher Retirement System of Texas.)

Relatively small, fragmented, and unaccustomed to outside investment, the U.S. porn industry (which generated roughly $12 billion in 2007) is some­what buffered from today’s credit crunch, but it has its own problems. Video sales have been falling by 15 percent a year since 2005, and online content doesn’t deliver the returns it used to, now that Web sites such as RedTube and PornHub basically give it away. Struggling companies need investors to help right their operations, and those that are thriving in a brutal market need funding for growth.

Enter Koenig and AdultVest. He sees the porn downturn as temporary and believes that technological improvements will trigger a turnaround. One example: iPorn, a start-up in AdultVest’s portfolio that is developing an application to deliver porn to the Apple iPod. “The industry’s not going anywhere,” Koenig says. “You’ve got 6 billion people on the planet,” he laughs, “and they’re all horny.”

Tom Johansmeyer is a freelance writer in New York.
Jump to comments
Presented by
Get Today's Top Stories in Your Inbox (preview)

Why Are Americans So Bad at Saving Money?

The US is particularly miserable at putting aside money for the future. Should we blame our paychecks or our psychology?


Elsewhere on the web

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

The Death of Film

You'll never hear the whirring sound of a projector again.

Video

How to Hunt With Poison Darts

A Borneo hunter explains one of his tribe's oldest customs: the art of the blowpipe

Video

A Delightful, Pixar-Inspired Cartoon

An action figure and his reluctant sidekick trek across a kitchen in search of treasure.

Video

I Am an Undocumented Immigrant

"I look like a typical young American."

Video

Why Did I Study Physics?

Using hand-drawn cartoons to explain an academic passion

Writers

Up
Down

More in Business

More back issues, Sept 1995 to present.

Just In