The British taxpayer has become a shareholder in Killing Kittens, a sex party organiser known for its exclusive and hedonistic events, under a scheme set up during the pandemic to help innovative firms.
Killing Kittens was founded in 2005 by Emma Sayle, a schoolmate of the Duchess of Cambridge. The company, which describes itself as a female-led sextech firm and has also developed an adult-only social network, has hosted members-only events in cities from London and Berlin to Miami and Sydney.
It used a programme called the Future Fund — set up by chancellor Rishi Sunak — to help it stay in business as the pandemic forced it to cancel its live in-person parties.
Loans provided by the Future Fund have an unusual clause that converts them into equity at the company’s next fundraising. This has left the British taxpayer with stakes in hundreds of businesses from Bolton Wanderers football club to the Black Sheep Coffee chain.
The state-owned British Business Bank, which oversees the Future Fund, confirmed that the scheme had taken a stake in Killing Kittens.
Sayle, who owns more than a quarter of the company according to Companies House filings which also confirm the equity-raising, said the company had raised £1mn in its latest round.
This valued Killing Kittens at about £15mn, of which the government had a roughly 1.5 per cent share according to Sayle. That marks an increase from a valuation of £5mn in 2018, and £10mn in 2019, she said.
“The government has already made money on the investment,” Sayle said.
Killing Kittens initially used crowdfunding platforms to raise cash after being cold-shouldered by traditional venture capital firms.
Future Fund’s loan to Killing Kittens attracted criticism in 2020, when Labour MP Sarah Champion called on the Chancellor to stop payments being made to the sex party organisers.
Sayle said she was surprised to receive such criticism from someone who claimed to support women’s rights, arguing that her company was about liberating women because only women can approach men at the parties.
She also pointed to the number of firms in the Future Fund that have gone bust. Fraud has been detected at some of the companies that have applied for the loans, while others have gone into administration.
The Future Fund scheme was set up in May 2020 to provide alternative funding during the pandemic for often-lossmaking but fast-growing “innovative” businesses that typically rely on venture capital. Sunak said at its launch that the fund would support “start-ups and innovative firms . . . break new ground in technology and innovation”.
It committed £1.1bn to 1,190 companies through convertible loan agreements. Questions have since been asked about how these companies were vetted for approval.
The British Business Bank said: “The Future Fund used a set of standard terms with published eligibility criteria. The process provided a clear, efficient way to make funding available as widely and as swiftly as possible without the need for lengthy negotiations. Applications that met all the eligibility criteria received investment.”
Killing Kittens intends to grow in more markets, including the US, and expand its adult social network. It claims to have 180,000 members and an annual turnover of about £1.4mn. More than four-fifths of this was generated in the UK, according to an investor presentation seen by the FT.
The Future Fund has also taken a stake in a Hybrid Air Vehicles, a business seeking to bring back airships or blimps, whose early backers included Iron Maiden singer Bruce Dickinson. The stake is also the consequence of a Future Fund loan which converted into equity.
Hybrid Air Vehicles said that it was developing a new category of aircraft designed to cut flight emissions by up to 90 per cent.
“Airlander’s development has been funded by a range of private sector investment, and an element of government financing, including through the Future Fund, which provided welcome support for our business at an important time in our evolution,” the company said.