StartOut tallies the unrealized potential of LGBTQ entrepreneursJuly 15, 2020
For years, StartOut executive director Andres Wydler has tried to convince government leaders and investors to put more resources behind LGBTQ entrepreneurs. His argument has been that if underrepresented founders were given equal access, local economies would have more jobs and innovation, and investors would see solid returns.
Most of the time, people were receptive to the argument. But they wanted to see the data—which didn't exist.
"There's virtually no research and no data on LGBTQ entrepreneurship," said Wydler. In short, nobody had captured what LGBTQ entrepreneurs were contributing to society.
The newly launched StartOut Pride Economic Impact Index is meant to fill that data void. StartOut collaborated with Socos Labs, a think tank and incubator, to map the unrealized potential of LGBTQ entrepreneurs at high-growth startups and to identify regions where more resources could have an economic impact.
The index is meant to shed light on how equal access to capital and other resources could bolster local economies. At a time when US unemployment is at levels not seen since the global financial crisis, StartOut hopes the message will be heard.
The database tracks metrics such as funding, jobs, company exits and patents. The results are broken down geographically, with the idea that governments, investors and others can use the map as a way to identify areas of opportunity. Metro areas can also see how they compare to similar cities.
The initial findings show that San Francisco, home to America's largest tech ecosystem and a vibrant gay community, has accounted for nearly 80% of the total US funding for LGBTQ entrepreneurs over the last 20 years. Moreover, those entrepreneurs have created more than 15,000 jobs.
But LGBTQ startup founders are completely absent in two-thirds of the 77 cities with 50 or more high-growth entrepreneurs. Overall, the numbers suggest that entrepreneurial ecosystems contain less than a tenth of the LGBTQ founders that would be expected if everyone had equal access, Wydler said.
Minority, immigrant and female entrepreneurs are frequently passed over by the venture capital establishment, said Elevate Capital founder Nitin Rai, who is not affiliated with StartOut.
"Our success is underestimated and our ability to fail is overestimated. So we get overlooked, and the bar goes higher," Rai said.
Assembling the Pride Economic Impact Index was a two-year effort that involved using AI to scrape the web for entrepreneurs who had publicly identified themselves as LGBTQ. StartOut also conducted outreach and allowed founders to self-identify. The sexual orientation of individual founders is protected, and the data is only used to track high-level trends.
JP Morgan Chase provided philanthropic funding for the index, and data on entrepreneurs and companies came from PitchBook and Crunchbase.
While no dataset on personal information such as sexual orientation could ever hope to be complete, Wydler is confident that the broad themes it illustrates are accurate.
"We don't want to build a parallel economy," said Wydler. "What we're going after is having a seat at the table."
Featured image via xavierarnau/Getty Images
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