Queer people are statistically disadvantaged when it comes to household wealth, employment, and economic security. Resources such as a stable job and higher education can increase earning potential. Owning property or winning prizes can also increase your income potential. drag race. But there is another way to build wealth. It’s about starting a business.
As it turns out, we gays are pretty good at business. Queer founders create 36% more jobs and 114% more patents than the industry average. People with money are paying attention. A report released last year by Morgan Stanley found that 45% of all U.S. investors want opportunities to invest in queer diversity and inclusion, and this number is lower among investors with an LGBTQ+ member in their household. This jumps to 76%.
Unfortunately, many of these business ideas never come to fruition because they don’t have the funds to make it a reality or don’t have the proper guidance to navigate the treacherous waters of entrepreneurship. . Too often we are targeted by angel investments and venture capital. Despite the recent Gallup funding, less than $2.1 trillion in startup funding over the past few years was raised by straight founders, according to StartOut, a nonprofit organization that fosters LGBTQ+ entrepreneurship. less than 0.5 percent. According to a poll, LGBTQ+ awareness in the US has risen to an all-time high of 7.6%.
“Even if we were to raise money, we would still get 84 cents of what straight, cisgender founders get,” StartOut CEO Bryan Richardson said.
To combat this, a number of queer-focused venture capital funds, business organizations, and communities have emerged to help LGBTQ+ people find financial security and fulfillment through entrepreneurship. They are committed to focusing capital on ambitious queer people who need it most, while providing ordinary investors with the opportunity to discover and mentor LGBTQ+ businesses on a deeper level.
venture capital closet
Patrick Driscoll, general partner at venture capital fund Chasing Rainbows, said many founders refrain from coming out to reduce the potential for controversy when raising money. “Coming out when fundraising means removing LGBTQ+ images on social media, or removing queer flags because someone might see that and not fund it.” ” he says. “Sadly, being LGBTQ+ is seen as a risk by some investors. Founders want to reduce risk to investors in every way possible. I will refrain.”
In venture capital, investors with different political or religious views can use limited partnership agreements to discriminate against founders, said Ben Stokes, founding partner at Chasing Rainbows.
“These provisions prohibit investment in things like gambling and war, but are instead used to openly discriminate against our communities,” he added. “If a founder goes back into the closet, it’s clearly a code switch. You’re wasting energy and time. That’s the key to success, not whether you can code-switch during the meeting.”
Megan Kashner, general partner at venture capital firm Colorful Capital, said some of the barriers queer people see in the early idea stages of entrepreneurship are that founders who identify as women are seriously He says it’s similar to the problem he faces in that he can’t accept it.
“Once you actually start having conversations with angel investors and venture capital investors, you start to fall into bias heuristics,” Kashner says, referring to closed decision-making. “Venture capital leadership’s tendency to focus on gender norms, race, and gender conformity often stops conversations before they even begin.”
Kashner and his fellow general partners wanted an outlet to share their career experiences and networks with up-and-coming founders, a common sentiment in VC. “One of the things we like to say is that we’ve always been queer professionals, but we’ve never been queer professionally,” she says. “In launching Colorful Capital, we decided to leverage our professional capabilities and apply them to our own community.”
think like a unicorn
However, working with an LGBTQ+ venture capital fund does not guarantee funding. Your business idea must have product-market fit and enough room to expand to attract investor attention.
“Entrepreneurs who want to start their own business need to understand that it’s not easy,” says Tristan Shucraft, founder and CEO of PrEP telemedicine company MISTR. . “MISTR wasn’t really a business that I set out to start. I was just trying to help a friend get on PrEP, and it became a business. When I went there, no one wanted to invest. Not many people wanted to invest in gay businesses. I ended up raising the money myself.” He runs companies such as the clubs Circo and the Tryst Hotel, as well as the Abbey in West Hollywood.
“Founders come to me with business ideas. [for investment] And they say they will capture 50 percent market share. “I appreciate the enthusiasm, but it’s probably not going to happen,” he says. “So I looked at that and thought, what if this founder could get 10 percent of the market? Would it be viable as a business?”
How to join the queer VC world
Driscoll explains that there are two main ways to invest in queer founders. Become a venture capital fund and an angel investor. “Angel investing is good if you really love a company or founder, or if you want to invest in an area you’re passionate about,” he says, but funds are a more diverse option. Investors are drawn to funds to reduce the risk of their investments and to have the opportunity to mentor diverse founders and share what they have learned in their careers with the next generation of queer movers and shakers. There are many things.
As you explore this world of entrepreneurship, be sure to seek out homosexuals early and often. StartOut’s services include an online portal of resources and in-person events throughout the year. “Investors can join our investor portal and have direct access to hundreds of talented LGBTQ+ entrepreneurs actively seeking investment,” Richardson said. Other businesses in his community and his VC funds include Out in Tech, Gainels, Pride Fund, and Arlan Hamilton’s Backstage Capital.
Also, take the time to organize your sources and prioritize high-quality sources. Surround yourself with smart people and smart commentary. “When you focus on a subject, you learn everything you can about it,” Shucraft says. “Some people don’t like to be surrounded by smart people because they feel threatened. There’s an old saying: ‘Learn from other people’s mistakes, because you don’t have time to repeat your own.'”
Unicorn is a long-standing name for companies that have achieved a valuation of $1 billion or more. These companies often reach the stratosphere not just because they’re based on great ideas, but because their founders were able to get to the right place with the right people at the right time. More queer unicorns would lead to both economic equality and a better world. There is a community of investors and mentors who want to help dreaming founders make it happen.
Nick Walney is outside Magazine financial columnist. She also writes his newsletter, Financialicious, an e-mail about LGBTQ+ business, finance, and culture. NickWolny.com@nickwolny
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