LGBTQ+ individuals have less access to capital then other entrepreneurs, but some investors and entrepreneurs are working to change that.
The entrepreneurial community knows that there’s value in diversity. Bringing together people with diverse backgrounds, ways of thinking and life experiences can help a group find solutions that have been previously overlooked. Despite that, LBGTQ+ people face barriers to accessing capital that can bring an entrepreneurial venture to life.
This June, during Pride month, we’re taking a look at the challenges that LGBTQ+ individuals face in the entrepreneurial world, and celebrating the founders and investors who are working to increase equity in our community.
LGBTQ+ and Capital
Venture capital is key for the success of many entrepreneurs. Unfortunately, social inequities are also reflected at the bargaining table. Females and minorities are underrepresented both as investors, and when it comes to who gets capital investment.
This is especially true for LGBTQ+ people. In fact, it’s hard to even get an estimate of how much capital goes into companies led by LGBTQ+ individuals, but one estimate puts it at less than 1% of total capital.
Slowly, this is beginning to change as people focus on more socially-conscious investment that prioritizes LGBTQ+ companies. Some recent initiatives looking to expand access to capital for LGBTQ+ companies include:
- Pride Fund 1: Run by Loud Capital, Pride Fund 1 is a $10 million venture capital fund that invests in companies led by LGBTQ+ people, and those who serve the LGBTQ+ community.
- Gaingels: Gaingels aims “to drive social change through investments” by investing in businesses that have LGBTQ+ individuals in leadership positions. In addition to investing, Gaingels aims to place more LGBTQ+ people in c-suite positions in growth-stage companies.
- Backstage Capital: Backstage Capital was founded by Arlan Hamilton, who identifies as a LGBTQ+, female, person of color. The fund has invested more than $15 million in underrepresented entrepreneurs.
Resources for LGBTQ+ Founders
The estimated economic impact of LGBTQ+ businesses on the American economy exceeds $1.7 trillion. Despite that, LGBTQ+ founders and business owners face hurdles ranging from lack of economic resources to discriminatory attitudes. Because of that, resources have popped up to help LGBTQ+ entrepreneurs overcome the specific challenges they face. These organizations include:
- StartOut: StartOut aims to empower LGBTQ+ entrepreneurs. The organization offers mentorship, an accelerator called the StartOut Growth Lab, and a host of other resources.
- SoGal: SoGal provides networking, grants and other supports with a focus on improving diversity among founders and funders.
- LGBTQ Funders: LGBTQ Funders compiles resources of foundations and corporations that support the LGBTQ community.
LGBTQ+ Entrepreneurs and Investors To Know About
Because of the challenges facing LGBTQ+ entrepreneurs, many people don’t disclose their identity, especially when they’re seeking investment. While that’s understandable, it also contributes to the problem of LGBTQ+ people being underrepresented in the entrepreneurial community. Because of that, it can be beneficial to follow successful LGBTQ+ entrepreneurs who are able to be out.
- Pocket Sun is the founder of SoGal and a venture capitalist set on improving diversity in the entrepreneurial community.
- Densil Porteous is a gay Black man and CEO of Pride Fund 1.
- Stephanie Lampkin is the founder of Blendoor, an AI platform that aims to mitigate unconscious biases in the hiring process.
- Kelly Rakowski is the founder of Lex, a dating app for the queer community. Lex closed its seed round of funding during the pandemic.
- Suki Sandhu founded Audellis, an executive talent firm focused on diversity. He’s also involved with a number of LGBTQ-focused nonprofits.
Which LGBTQ+ entrepreneurs are you following?