Meet the venture capitalists investing in the LGBTQ+ community

Ben Stokes and Patrick Driscoll are venture capitalists, but they aren’t vulture capitalists.

They’re more like storks, but instead of delivering babies, they provide support, advice, and money for queer-owned businesses. The men serve as the conduit between wealthy investors and LGBTQ+ entrepreneurs.

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Even with the Equality Act, Torres believes LGBTQ-owned businesses “have no enforceable means of holding the financial system accountable” without his proposal.

“Money is a beautiful by-product of doing something impactful – to create opportunities for people within the LGBTQ+ community,” Stokes says.

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“Less than 0.5% of venture funding goes to someone who identifies as part of the LGBTQ+ community. By investing in LGBTQ+-founded companies, we’re already doing something pretty incredible when it comes to creating opportunities for entrepreneurs to start and grow their businesses. “

“The larger goal of our fund is to prove that queer founders outperform and that more capital should be allocated to them,” Driscoll added. “We want to drive the current 0.5% of venture capital that goes to LGBTQ+ founders up to a percentage that actually reflects [their representation in] the general population, which continues to rise with each generation.”

“Our investments create a fly-wheel effect for people within our community,” Stokes points out. “Because of our investment: founders get capital to start their businesses, and as their businesses grow, they create jobs for people within the community, which then has an economic impact on the community, which again creates more opportunities for people within the LGBTQ+ community to create wealth generation by reinvesting back into our venture fund which creates more opportunities for more LGBTQ+ entrepreneurs.”

It’s been said that there’s no ethical consumption in capitalism, but the two disagree. They argue that shrewd investing in businesses focused on the public good can be beneficial.

“We believe you can invest in companies that have a net-positive impact on the world. We’ve invested in a number of them,” Stokes says.

Driscoll continued the theme, saying, “We factor this thinking into our diligence process, but also in how we source deals. It’s apparent to us that LGBTQ+ founders are incredibly capable, which means amazing returns for us. However, in addition to their abilities, there seems to be a focus in sectors like financial inclusion, medical technology, access to education, and climate change among the LGBTQ+ founder population. In addition to empowering the queer community, LGBTQ+ founders typically want to help the world too.”

“The main reason we believe these pillars have emerged is because they solve problems many of the founders have personally experienced themselves,” Stokes adds. “They intimately understand the disparity that people within our community face, as they’ve seen it first hand. So, they’re creating companies that solve for it.”

Investors have typically shied away from minority-owned businesses and LGBTQ+ founders are often facing the challenge of securing more funding on their own. While Chasing Rainbows exclusively invests in LGBTQ+-owned businesses, the fund includes money from non-queer people, too.

“An investor will find any reason not to invest in a company. They are constantly on the lookout for red flags,” Driscoll says. “For many LGBTQ+ founders, their identity can be perceived as one such flag. Are they too femme? Are they too butch? How will customers react to a trans founder or perhaps a founder who is married to someone of the same sex? In a world where de-risking is paramount, many investors still see sexual orientation, gender identity, and other behaviors as a risk, and thus choose to invest into ‘safer’ founders, which mostly translates to white, cis, straight, and mostly male.”

“As a fund, we’ve been very visible in the venture ecosystem as a fund which specifically invests in LGBTQ+ founded companies. Brand awareness within the community is really important to us, and so we’ve partnered with a large number of LGTBQ+-specific entrepreneur networks to ensure that we have visibility. We’ve been humbled by how many founders have found us by googling LGBTQ+ investor,” Stokes added. “Ensuring we have representation across the LGBTQ+ acronym is also key, as it ensures that everybody within the LGBTQ+ community can see themselves on our side of the table and knows that Chasing Rainbows reflects their identity.” 

“I personally would love to have only pink money in the fund; however there are so many allies that want to be a part of our story. For example, our thesis and approach really resonates with parents of children who identify as LGBTQ and with the ‘queering’ of Gen Z and Gen Alpha, there are more and more high-net-worth parents with queer kids. Additionally, large institutions like foundations, endowments, and even corporations want to have a net social good as a part of their investment strategy,” Driscoll tells LGBTQ Nation.

“I think there are many challenges for emerging fund managers, but first and foremost for us, it’s been about building the story of what investing in LGBTQ+ founders would look like. As we were one of the first funds to fully dedicate ourselves to investing in LGBTQ+ founders, we have had to educate the wider investment community on why LGBTQ+ founders make good investments. Most importantly, we see our fund as being privileged to showcase the incredible talent that’s within the LGBTQ+ community to those around us in the venture ecosystem.”