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TLDR:
- A growing number of venture capitalists are backing LGBTQ+ founders to help them scale their companies and create jobs.
- Only 0.5% of the $2.1 trillion in startup funding between 2000 and 2022 was raised by LGBTQ+ founders.
A growing number of venture capitalists are investing in LGBTQ+ founders to help them overcome the challenges of raising capital and expanding their companies. LGBTQ+ entrepreneurship nonprofit StartOut has highlighted the disparity in funding, with only 0.5% of startup funding coming from LGBTQ+ founders despite representing 7.2% of the U.S. population. The nonprofit’s State of LGBTQ+ Entrepreneurship Report reveals that a significant portion of funding is concentrated in a few metro areas, leaving cities like Orlando, Charlotte, and Birmingham without LGBTQ+ founders. StartOut’s CEO emphasized the economic benefits of policies supporting LGBTQ+ entrepreneurs, such as creating jobs and attracting funding.
One organization making a difference is Chasing Rainbows, a venture capital fund that invests in LGBTQ+ founders across various sectors like sustainability, healthcare, education, and financial equity. Despite operating with 16% less funding than the average, LGBTQ+ founders have shown impressive job creation and innovation numbers. Chasing Rainbows advocates for diversity in investment decisions and supports state-level initiatives focusing on founder diversity in venture capital portfolios.
Chasing Rainbows founder Ben Stokes emphasized the challenges faced by LGBTQ+ founders, including the need to hide their identity during fundraising to avoid discrimination. Stokes highlighted the importance of creating a supportive ecosystem for underrepresented innovators and the need for increased funding and research to address barriers faced by LGBTQ+ entrepreneurs. The recent White House roundtable discussions on entrepreneurship hurdles aim to find ways to provide grants and non-dilutive capital to support LGBTQ+ founders.
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