How to make VC more LGBTQ+ inclusive, and why it matters

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When Sarah Finegan, a Berlin-based director at Antler VC, came out while working at Goldman Sachs, she saw that the world of work had changed.

“It completely changed my perspective and opened up opportunities – it expanded my internal and client networks, gave me new professional opportunities and further developed my reputation,” she says.

She was then attracted to Antler because a partner who had been a diversity champion at Goldman Sachs joined the leadership team at VC’s first stage. And while she says Antler has been a very supportive place to work since coming out to her co-workers, she feels there’s still very little LGBTQ+ visibility in the VC world.

“It’s quite unusual because even in investment banking there are industry leaders speaking out and being visible about it, but I don’t have the same in the banking industry. venture capital,” she says. “I don’t see anyone like me. No one is out, no one is visible, no one really talks about it.

Why Inclusivity Matters

Finegan has built a network that can be difficult for others to reach and has seen firsthand the benefits that a diverse investment team brings, not just for the investor.

“Our team has an extremely extensive network within DACH’s startup and VC community, but additionally, my network and perspective provides unique access and support to fund founders,” she says. .

There are other incentives for VCs to become more inclusive of the queer community as well.

Stephanie Sarelakos is a startup investor at The Venture Collective and has worked with many gay-led teams. She says their experiences often lead them to be better founders.

“Having been fortunate enough to work with several founders in our portfolio who identify as LGBTQ+, I would say there is a level of resilience that comes with being queer that allows them to persevere as entrepreneurs – arguably one of, if not the most, important personality traits in entrepreneurship,” she says.

How to queer your deal flow

While Finegan’s experience demonstrates a depressing lack of progress in queer inclusion in European venture capital, things are starting to change.

Christian Tooley is the founder and CEO of i³ Invest, a platform to foster “community, connection and capital” for LGBTQ+ founders and investors.

Venture capitalists and angel investors can to apply to access i³’s deal stream – a selection of startups that are screened with a model that ranks a startup’s potential impact based on three metrics: investability, innovation and intersectionality.

The first two will seem clear to many investors, but intersectionality, for those who have never encountered the term before, means recognizing that each individual faces different experiences in life, depending on how many identities intersect. which he holds.

For example, if you take a founder who is a black woman, she is likely to face more discrimination in an investment room than a white woman and a black man. This is because her identities as a woman and as a person of color intersect.

Christian Tooley

Tooley coined the term “intersectional investing” and strongly believes that founders with intersectional identities deliver better returns. He explains that it’s a way of looking at founders as innovative individuals, rather than ticking boxes in a diversity and inclusion survey.

“When we look at LGBTQ+, we consider race, gender, and socioeconomic status. [factors] too,” he says. “The more intersectionality a founder has, the more they resonate, innovate and demonstrate empathy, which creates a greater chance of success for greater returns and positive impact.”

And while intersectionality is central to i³’s philosophy and value proposition, Tooley points out that the other two metrics of investment and innovation are equally important.

“This proprietary approach allows us to ensure that the deal flow is of high quality. We don’t just want to push startups that are investable and gay for fun, they actually have to have strong business potential,” he says.

Tooley says that to date, more than a dozen funds have tested the i³ investment platform to find deal flow, with more being integrated every month.

Bigger issues

While the i³ investment is certainly a good start in trying to make it easier for LGBTQ+ people to navigate the world of startups and businesses, there’s still a long way to go.

Tooley points out that, compared to other marginalized groups, the queer community is often less easily identifiable by people, which makes it a lower priority when it comes to diversity and inclusion.

“It’s about hidden intersectionality – it’s harder to hide your gender or your race,” he says. “This community is often just ignored. Often unconsciously, sometimes consciously, because it is not a point of diversity that can be easily captured.

When it comes to making venture capital firms more LGBTQ+ inclusive, Tooley encourages funds to appoint queer people to their investment committees.

“It has to be the ones making the decisions, sitting at the top of the fund, that’s where you have to have those queer voices,” he says.

Finegan agrees with this and points out that it is a serious advantage to have a diversity of networks within an investment team.

“I’m plugged into very, very different communities than the guys are. They have the McKinsey network here, the startup and VC community in Berlin, but we also have my network and it offers a much more diverse pool of people,” she says.

Why Inclusivity Matters

Finegan says those promoted to leadership positions at Goldman Sachs are required to complete a bias training course, but is skeptical that many VCs would engage in such a move.

“If you were trying to get VCs to do this, I honestly don’t think many of them would lean into it,” she says. “First, the conversation needs to happen. We also have to project an environment of openness, but also project that we are not assholes and that we are accessible.

And as a gay person and a person of color, Tooley is all too familiar with how the investment landscape can cause queer people to hide their true identities, and the impacts that can have.

“You can try to conform to a certain type of individual that you think is the only one who can get the capital, and also to some extent the only one worthy of getting that capital,” he says. “When these founders end up removing identity, and everything that differentiates them from the norm, it has mental health implications and can cause an identity crisis.”

Tooley encourages queer founders seeking funding, and investors looking to diversify their dealflow, to to apply through the i³ investment website. He is also launching a “first of its kind” large-scale research project on queer founders, and is currently seeking other partners and sponsors.

Tim Smith is Sifted Iberia’s correspondent. He tweets from @timmpsmith.

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