Identity.vc: Championing LGBTQ+ Innovation in Europe’s Startup Ecosystem
In the vibrant and competitive world of venture capital, a new wave of diversity-focused funds is emerging, aiming to bridge the gap in funding for historically underrepresented founders. While the U.S. has seen the rise of LGBTQ+ focused investment syndicates like Gaingels, Europe has long lacked a dedicated venture firm championing LGBTQ+ entrepreneurship. This is where Identity.vc, a recently launched Berlin-based venture firm, steps in, aiming to fill this crucial gap and empower a new generation of LGBTQ+ founders to flourish in the European startup ecosystem.
Founded by Til Klein and Jochen Beutgen, Identity.vc writes checks ranging from €250,000 to €1.5 million for early-stage companies operating in various sectors, from pre-seed to Series A. Their investment focus lies in companies with at least one founder or executive who identifies as LGBTQ+. While the firm’s portfolio is still in its early stages, they have already backed four companies, including eco.mio, a software plugin that helps businesses manage their environmental impact in travel, and Paxton, an AI legal tech platform.
Beyond financial investment, Identity.vc aims to create a supportive ecosystem for LGBTQ+ founders and investors through community building initiatives. Recognizing the challenges faced by LGBTQ+ founders who may choose to remain closeted to avoid potential bias, Klein emphasizes the importance of creating a safe and inclusive space where authenticity is valued.
"The majority of LGBTQ+ founders are not out to their investors because they feel that could be a disadvantage," says Klein. "We think that is a big mistake, and it means you don’t have this trusted relationship with your investors. Those investors who don’t like it, you don’t want to have them on your cap table. You should be able to be yourself."
This commitment to fostering a transparent and welcoming environment seems to be resonating with Limited Partners (LPs), who are increasingly seeking investment opportunities that align with their values and contribute to a more diverse and equitable landscape. Klein highlights a recent Morgan Stanley survey that revealed 45% of U.S. investors are actively looking to back LGBTQ+ founders.
"So far it’s been very supportive from investors and other VCs," affirms Klein. "They love to work with us and our experience. When I talk to regular funds, they know they should be more diverse. They see us as an opportunity to increase their diversity. We have not yet experienced that backlash, maybe because Europe is so much more advanced when it comes to diversity investing."
This positive reception contrasts with the challenges faced by some diversity-focused funds in the U.S., where backlash and legal pressure have threatened their efforts. Identity.vc’s success in securing funding despite raising a sizable debut fund of €50 million, having already closed €15 million, demonstrates strong investor confidence in their mission and strategy.
The firm’s approach differs from Gaingels in its structure and scale. While Gaingels operates as a syndicate, Identity.vc has chosen to raise a traditional fund to facilitate easier follow-on investments. The decision to raise a substantially larger debut fund, resisting suggestions for a smaller starting point, underlines the firm’s commitment to making a significant impact and building a strong foundation for its future endeavors.
"In the U.S., there is a real LGBTQ+ investor community — that’s not the case in Europe," Klein explains. "We need to have resources and people who can do community work."
This commitment to building community manifests through various initiatives, including a dedicated Slack channel currently boasting 300 members, and hosting events in key European cities like Madrid, Amsterdam, and Paris. These gatherings aim to connect LGBTQ+ founders and investors, facilitating collaboration, information exchange, and establishing vital relationships crucial for progress.
“We will bring together the local community, and you’d be surprised how little LGBTQ+ founders and investors are connected,” states Klein. “We could create value by bringing local people together. If there is an early-stage startup that is too early for us and an angel investor, I can bring them together.”
Beyond the immediate impact on the LGBTQ+ community, Identity.vc’s approach also holds broader implications for the European startup ecosystem. Evidence suggests that diversity fosters innovation and improves performance. By focusing on underrepresented founders, Identity.vc not only promotes inclusivity but also opens the door to potential investment opportunities that might have been overlooked by traditional venture firms. This proactive approach towards inclusivity contributes to a more vibrant and resilient startup ecosystem in Europe.
"There are multiple reasons why we think it’s needed," concludes Klein about the importance of Identity.vc’s existence. "We believe strongly we can outperform because of the fact that diversity-driven performance and backing the LGBTQ+ community give us a unique access to startups and access to interesting deals."
As Identity.vc continues to raise capital and expand its portfolio, it promises to play a pivotal role in nurturing and empowering a vibrant community of LGBTQ+ innovators in Europe. Their success, coupled with their commitment to fostering a culture of inclusivity and authenticity, serves as a shining example of how investing in diversity can not only unlock untapped potential but also drive innovation and reshape the landscape of European entrepreneurship.
The narrative of Identity.vc offers a compelling blueprint for a more equitable and inclusive future where every entrepreneur, regardless of gender identity or sexual orientation, has the opportunity to succeed and contribute their unique talents to the world. The journey of Identity.vc is just beginning, but it holds the potential to drive significant positive change within the European startup ecosystem and beyond.
