The figure for LGBTQ+ founders? We don’t know, because the data doesn’t exist: nobody is collecting it and, as a new report has discovered, many founders wouldn’t want to share it anyway.
Three quarters of LGBTQ+ founders withhold their identity from investors, according to a new report from Proud Ventures, a UK collective of LGBTQ+ investors.
The report heard from 118 LGBTQ+ founders and 61 investors (not all of whom identified as LGBTQ+) in the UK, and is one of the first to look into the experiences of LGBTQ+ people in the tech ecosystem.
It found that a fifth of LGBTQ+ founders thought that sharing their identity would harm fundraising efforts and that lesbian founders raise 22x less than gay founders. It also found that 79% of LGBTQ+ investors sometimes hide their identity from others in the industry.
One in three of LGBTQ+ founders would never share their identity
The vast majority of LGBTQ+ founders didn’t feel comfortable sharing their identity with every investor they met — and 34% said they would never share that information. For those founders who are gender minorities (anyone whose gender identity is not the same as it was at birth, like transgender, non-binary or gender non-conforming) the figure rose to 57%.
Nearly 20% said they didn’t share their identity because they thought it could hurt their business. Just under half of LGBTQ+ founders said they didn’t share their identity because they didn’t think it was relevant, while over a quarter said they didn’t feel comfortable opening up to investors.
“I’ve had people say things like, ‘there’s no need to mention [your sexuality]. It may cause you issues with funding [your venture]. Why don’t you get the funding first, then come out?’” founder and CEO of angel syndicate i³ investing Christian Tooley told Sifted last year.
Investors also withhold their LGBTQ+ identity from other investors. 79% said they concealed it to some extent and 26% said they’d never share that information with others.
Additional barriers to fundraising
35% of founders thought their ability to raise capital had been affected by their LGBTQ+ identity.
One cisgender bisexual founder said that an investor pulled out of a deal once they discovered they were gay, saying there wasn’t a “cultural fit”.
“The experience of rejection because of something so personal made me afraid to be myself for 12 months afterwards,” the founder said. “I found myself lying and pretending I had a girlfriend at work and to investors… I even found myself drinking more and researching conversion therapy.”
There are also clear differences in the LGBTQ+ community around the amount of funding raised. Non-binary, gender non-conforming and lesbians have the most difficulty raising cash from investors.
While sexual minorities — people who are gay, lesbian, bisexual or queer for example — who are open about their identity tended to raise more than those that weren’t, the same isn’t true for gender minorities.
Lack of support from investors
While 80% of the investors surveyed said that they are taking steps to support “diverse” founders, just 26% said they are specifically taking steps to support LGBTQ+ founders.
VCs which do have LGBTQ+ founders in their portfolio are far more likely to be actively looking to be more inclusive than those with no LGBTQ+ founders in their portfolio.
What can VCs do to level the playing field?
The report listed a number of recommendations for investors to better attract and support LGBTQ+ founders:
- Clear signage on LinkedIn and the firm's website stating support for LGBTQ+ founders and actions being taken to address the funding gap.
- Adding pronouns to an email signature. Respondents said this was a clear signal that an investor was LGBTQ+ inclusive.
- More training internally, led by senior leadership.
- Prioritising diverse talent. Founders commented that seeing more LGBTQ+ VCs would have a big impact on how comfortable they felt being open about their gender and sexuality.
- Quantifying diversity, equity and inclusion. Adopting the Diversity VC Standard and surveying portfolio founders to understand which minority groups have and haven’t been backed are two ways to do this.