Adult Wellness Acquisition Turnaround

Mehtab shares a story about how his firm acquired and turned around an adult wellness (sex toy) retailer.

"We invested in an adult health and wellness retailer - that's a nice way of saying sex toys. I'm in Utah so... We invested essentially at a fairly far below market valuation just because others were unwilling to invest in that kind of company. This was 2018 back when it was more taboo than now. Now there's a few publicly venture funded brands like Dame in that space.

They were doing $6 million a year as a dropshipper. I'd say market valuation would have been like $10-15 million back then, but we got in at around $1 million. The company paid us a royalty until we were paid back in full on that initial investment.

We got involved and helped boot up their initial operations. My cofounder jumped in and helped them transition from a dropshipper to holding their own inventory. He helped them launch their facility in Utah, make their first few hires and GMs. I helped them raise debt to fuel growth which took them from $6 million to around $12 million. We later sold our equity via secondaries to a VC firm that invested once that value had been created."