Inclusive sexual wellness brand Cake has raised a bridge round of funding ahead of its major expansion to Target.
On Tuesday Cake announced it raised $2.5 million in a bridge round led by existing investor Lerer Hippeau, bringing its total to $8.3 million in seed funding. The funds will be primarily used by the brand to expand into retail, making new key hires along the way. They’ll include a head of retail and a head of product development. Cake began selling in Walmart in July 2021 with four products in over 4,000 doors. It’s now expanding to Target in April with five products in over 1,000 doors. Notably, Walmart sells three lubricants and a sex toy, while Target is selling four sex toys and one lubricant.
Cake launched in June 2020 with five products priced from $22-$24. Its product count has since increased to 37, including product kits. Cake’s branding and products are designed with the idea that gender and sexuality are nuanced and fluid, and “traditional” relationship dynamics are evolving into outliers. The founders, Hunter Morris and Mitch Orkis, were unsatisfied with depictions of sex products and relationships in most sex shops. What’s more, products sold in drugstores looked outdated and were not made from clean ingredients. Cake’s products, which feature names like “So-Low Lotion” and “Tush Cush,” are designed for all people, including gay, lesbian and heterosexual couples, as well as individuals.
“We wanted to focus on the bridge round and not a Series A, because our cap table [of existing investors] was able to support us again on this,” said Morris, CEO of Cake. “Sometimes you may see bridge rounds where brands have to bring in new investors because something’s not going right. Ours is additional support from our [investors] who have been on our side for a long time. Things are going really well and going faster than anticipated, which means more capital demand.”
With brand partners like Cake, among others, Walmart and Target have made pretty dramatic shifts in their tune regarding sexual wellness. In-store merchandising historically focused on the health rationale for sexual wellness products, via products such as tampons, rather than the pleasure proposition. But sexual wellness has made great strides as a consumer category, as specialty retailers like Violet Grey, Saks Fifth Avenue and Sephora have incorporated sex products into their assortments. At the same time, mass retailers have realized they would be remiss to not jump onto the wellness shift. When Walmart and Target announced they would sell vibrators, in Oct. 2018 and April 2019, respectively, they made headlines. Target, in particular, started ramping up its sexual wellness offerings in March by onboarding intimate care brands like Bloomi and condom brand B Condoms.
Orkis and Morris said Cake will expand to additional retail partners in 2022 but declined to share specifics. Morris declined to share total sales figures and the breakdown of wholesale retail versus DTC e-commerce sales.
“The tides continue to change in the right direction,” said Orkis. “Cake is becoming the brand to grab the people [who aren’t as familiar with inclusive sexual wellness] and say, ‘Come along on a journey.’ We can provide [inclusive] education and do it in a very fun way where we’re not talking down or shaming people if they don’t know.”
To promote the Target launch, Cake will use its go-to marketing levers of TikTok, social media influencers and paid social ads. Though online advertising is notoriously difficult with sexual wellness brands, Cake can advertise its condoms because condoms are FDA-designated as a medical device. Cake uses condoms and lubricants to drive people to the brand, and it has a 40% repeat purchase rate on its DTC e-commerce site, said Orkis. He said this high repeat rate is due, in part, to the brand’s product launch strategy: Over the past two years, the company has launched approximately 50 products. During product development, it will share three or four versions of each product with a select group of 100 people who are part of the Cake’s “Test Kitchen” customer feedback program. After testing and collecting feedback, Cake will launch the version with the highest rating.
“[Our] philosophical belief at Cake is that the only way to have more fun sex is to try new things,” said Orkis. “We’re creating [product] systems around sexual experiences and bringing those into retail to help people truly have more fun.”