Venture capitalists provide the funding required to launch innovative new projects, where there is a substantial amount of risk of success. These projects might be new ideas, or they might be an expansion of an existing business. The hope for the venture capitalist is that the ideas or products are successful, and generate a substantial return on their investment, in a relatively short time period.
The world of venture capital is not commonly perceived as inclusive and diverse. Much of the activity by LGBTQ venture capitalists is affinity based investment, where they put money into companies whose values they support, and are led by people with whom they have a sense of community and connection.
For LGBTQ entrepreneurs, being out themselves creates challenges right from the beginning. Research shows that they face greater obstacles than their straight counterparts, by adversely affecting their ability to line up suppliers, customers, hire employees, and so on.
Thus, it is more challenging for them to get funding for their ventures. However, being out conveys a certain honesty and integrity being applied to the venture that is appreciated by funders. It also means that location of the venture is important to success for an LGBTQ entrepreneur, and more LGBTQ ventures are founded in supportive areas such as Boston, California, New York, or Washington.
For an LGBTQ entrepreneur, having a relationship with an LGBTQ venture capitalist or startup advisor can make a big difference in the process of starting up their business. Because of the high degree of risk in the success of the venture, trust is an important ingredient to the relationship between the entrepreneur and the funder. A trusting relationship can translate into success for the venture itself. The relationship between the two parties is very close.
Having a pool of LGBTQ venture capitalists and startup advisors available to the LGBTQ community can translate into more startup activity by the LGBTQ community. In their absence, a young LGBTQ person might forego their innovative startup idea, for a more secure job at a company that accepts, or even celebrates, their identity.
Startup communities offer opportunities for collaboration, that lead to a greater potential for success. A strong network of venture capitalists, entrepreneurs, advisors, and advocates helps. They can also help develop products and services that are tailored for the LGBTQ community itself, such as travel, app development, health and beauty products, and so on.
Embarking on an entrepreneurial venture is easier with accommodating partners and role models, who act as inspiration. Though the community is small, they play an important role.
Queerbio have identified prominent venture capitalists and startup advisors, who identify as LGBTQ, from Canada, France, Germany, Great Britain, and The United States.