5 Reasons Why LGBTQ Entrepreneurs Are Joining Forces

Entrepreneurship and risk are a package deal, and launching a company as an LGBTQ person places yet another set of challenges on an already uncertain endeavor. A question such as, “Is my product-market fit secure enough to raise venture capital?” gives way to something more haunting: “Could my sexual orientation or gender identity limit how much funding I get from investors?” As a result, 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.

To help reduce career barriers for LGBTQ entrepreneurs and promote innovation around issues affecting the LGBTQ community, Venture for America and Out in Tech have  joined forces. Together, they are committed to building networks of LGBTQ entrepreneurs, promoting diversity in startup communities, and enabling more LGBTQ people to see entrepreneurship and tech as viable career paths.

Here’s why:

1. The data show real inequality gaps for LGBTQ people in entrepreneurship.

Entrepreneurship, especially in tech, has a well-documented problem with racial and gender diversity. Research on LGBTQ diversity is more limited – an issue in and of itself – but evidence suggests LGBTQ founders also face difficulties.

A 2016 study by StartOut reported that 37% of LGBT startup founders in the United States did not come out to their investors, and LGBT-founded companies raised 11% less capital than a sample of their non-LGBT peers.

Companies in states and cities with anti-LGBT policies, as well as those founded by LBT women, were at an even greater disadvantage. Among study participants, LGBT founders were more than twice as likely as their non-LGBT counterparts to move their companies to more accepting locales like California, New York, and Massachusetts. Seventy percent of LBT women raised less than $750,000 of outside capital, while 47% of GBT men raised at least $2 million.

2. Strong networks provide better access to resources and investors.

Startup life can be lonely, and that isolation can be costly for new ventures. Research from Babson College on common practices of entrepreneurs highlights the need for “membership in physical communities where ideas can be shared and shaped.” Startup communities tend to offer good opportunities for productive collaboration like co-working spaces and meet-ups around shared interests. Even with the best intentions of inclusivity and acceptance, however, straight white men tend to dominate these circles and diversity remains elusive.

As a result, and due to the smaller proportion of LGBTQ people in the general population, the density of LGBTQ people in startup networks is low. This makes it tough to find a strong network of advisors, confidantes, and advocates. Building communities of LGBTQ entrepreneurs can help. Together, we can connect with each other and generate the social capital necessary to build customer bases, recruit top talent, and attract investors.