Three-Quarters of LGBTQ+ Founders Conceal Identity From Investors, Reveals Report
February 9, 2023At least 75% of LGBTQ+ startup founders conceal their sexual orientation or gender identity from investors, according to a new report from Proud Ventures, a UK network of LGBTQ+ venture capitalists and angel investors. Interestingly, 79% of LGBTQ+ investors also admit to hiding their identity from others in the industry.
The vast majority of LGBTQ+ founders said they didn’t feel comfortable sharing their identity with every investor they met, with more than a third (34%) confirming they would never share that information. The figure rose to 57% for founders who belong to gender minorities communities (such as trans, non-binary or gender non-conforming).
Nearly 20% said they didn’t share their identity because they thought it could hurt their business or ability to raise funds. 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 just didn’t feel comfortable opening up to investors.
Additionally, more than a third (35%) of founders thought their ability to raise capital had been affected by their LGBTQ+ identity. Gender minorities, such as non-binary, gender non-conforming and lesbians experience the most difficulty raising cash from investors, according to the study. In fact, lesbian founders raise 22x less than gay founders. Additionally, trans founders raised 10x less and cisgender women founders raised 2.5x less than cisgender men founders.
A number of startup founders also reported facing discrimination as a result of their LGBTQ+ identity, revealed the research. The report cited one anonymous founder detailing how a cisgender bisexual founder was the target of a drunken slur from an investor on their sexual identity after coming out. No wonder few LGBTQ+ founders prefer to conceal this information.
“Recent research has shown us that concealment is a real tax on LGBTQ+ people. Academic studies have found increased concealment comes at a cost to an individual’s wellbeing with a greater risk of depression, anxiety, and poorer cognitive and physical health,” stated Henry Lane-Fox, co-founder and CEO of Founders Factory.
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. So what more can VCs do to level the playing field? The report offers several recommendations to better support LGBTQ+ founders including the following:
- Publicly show support for LGBTQ+ founders on LinkedIn and the firm’s website.
- Adding pronouns to an email signature, also provides a clear signal that an investor is LGBTQ+ inclusive.
- Offer LGBTQ+ inclusion training.
- Ensure your investment team is also diverse. Seeing more LGBTQ+ VCs would help founders to be more open about their gender and sexuality.
- Look at and quantify diversity, equity and inclusion metrics for funds, and adopting the Diversity VC Standard.
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