Figuring out how much capital you need to get your business off the ground is one thing, but securing those funds is a whole other ball game. And it’s disproportionately difficult for queer business owners.
A study by non-profit think tank Movement Advancement Project (MAP) confirms that securing funding is harder for LGBTQIA+ founders: 80% of LGBTQ+-owned small businesses in the US that applied for business loans in 2021 were denied financing, compared with just 48% of non-LGBTQIA+ businesses. When asked why they were denied loans, 33% of queer business owners said lenders didn’t approve financing to “businesses like mine,” compared with 24% of non-LGBTQIA+ businesses.
The deep systemic issues behind this disparity run deep within the financial services industry. From discrimination in mortgage approvals to hurdles in getting student-loan financing, LGBTQIA+ people are faced with unnecessary and avoidable constraints when it comes to financial support.
But there are a growing number of funds and resources specifically designed to help queer founders on their business journey. We’ve put together some important things to consider before you set out on your quest for cash, such as what to include in a business plan, tips on how to approach investors, and learnings from real-life founders.
How To Approach An Investor: CEO Densil Porteous’s Tips On Getting Funded
Densil Porteous (he/they) is a venture CEO and non-profit executive. He’s the executive director of community organization Stonewall Columbus and the CEO of Pride Fund 1, a venture capital firm that funds LGBTQIA+ businesses. Here, he shares his insights into what LGBTQIA+ founders should consider when approaching an investor.
1. Give it your all. “I give everything more than 100% of my energy, so if I’m thinking about investing in a venture professionally or personally, I want to see a certain level of passion in the founder.”
2. Outline your mission. “Start with: what problem are you solving? If it’s for a specific community, can you extrapolate that to serve other areas and communities? Those are the business ideas that you’ll see people invest the most in because they can see it translate to something else.”
3. Do your homework. “You need a business plan and pitch deck, but [they’re] not the most important thing. I’m looking at who the founder or venture is. How do they fit in the industry they’re in? How are they filling a need? Do I think it’s viable? You need to show you can forecast trends.”
4. Be honest. “I can’t expect everyone to be generating revenue in a certain way, and that’s OK. Be honest about what’s possible for you. You can see from what they’re doing whether you think the story is going to take them to a certain place.”
5. Nail your story. “I don’t look at every investment or venture business idea as the next thing that’s gonna make me millions. I think of it more as: will this investment make an impact? Will this help the company get to the next level? You’re looking at returns and all these other things, but your story is key when pitching.”
Case study: HER
“It’s About Resilience”: Her’s Founder On Funding A Dating App
Many businesses by LGBTQIA+ people start as solutions to problems. That was the case for Robyn Exton (she/her), founder of dating app HER, who realized that she was bisexual in her 20s.
“I was going out on the scene in London and having a great time, but there was only one website for women and it was terrible,” says Exton. During this time, in 2011, Exton was working at a brand strategy agency and one of her clients was a dating app. After learning what was on the market, she decided to build an app for lesbian and bisexual women. Exton started the company in London just six months later and found it tough to find money in the UK. “I did a lot of grant applications, I entered a lot of pitch competitions, and I took money wherever I could get it,” she says.
She then went through an accelerator in London, raised a “tiny” seed round, followed by an angel round, and then a full seed round. She also did Y Combinator, an American accelerator known for funding Airbnb, DoorDash, and Reddit. She found more success in the US than in London, meeting women through the Lesbians Who Tech & Allies conference in San Francisco in 2014, and she ultimately moved to the US the next year. In total, Exton ended up raising $2.5 million to launch HER.
But the journey wasn’t without its obstacles—specifically because the business was by and for LGBTQIA+ people. Investors often invest because they relate to the person they’re investing in, Exton says, and so under-representation of any kind in the investing community is always going to have a direct impact on the people seeking funds. The stats speak for themselves: just 0.5% of the $2.1 trillion that went to fund startups in the US was given to LGBTQIA+ entrepreneurs, according to non-profit StartOut.
Exton says that, early on, when your business or vision hasn’t yet been validated, you need “someone who’s willing to take a leap of faith.”
However, she says, it can be as simple as connecting to the person you’re pitching. “Being queer, you’re so immersed in the queer world and the queer community, you forget that people outside of it see different patterns and stories,” says Exton. “They need to see something in you that resonates with them personally, or they’ve been really interested in that market.”
When Exton started HER a decade ago, she didn’t have the numbers to prove the scale of the community she was reaching. “The data and awareness of the size of the LGBT community was so minimal. There would be a survey every 10 years, and there weren’t the latest stats,” she says. Now, Exton says the numbers are there to prove the necessity of serving the LGBTQIA+ community. Of course, there are still many alarming systemic issues and discriminatory practices when it comes to LGBTQIA+ business funding, but Exton’s advice is to keep pushing ahead.
“It’s about resilience. You’re going to get 10 times more ‘no’s than you are a ‘yes’. It really is a numbers game,” she says. “If you’ve got something that’s working, you’ll find people that’ll back you.”
Takeaway. Finding the right investor is all about connecting to who you’re pitching.
Case study: Bump'n
“Don't Be Afraid To Ask For Help”: Community Support With Sex Toy Brand Bump’n
Disability awareness consultant Andrew Gurza (they/he) launched accessible sex toy line Bump’n when he and his sister, Heather Morrison (she/her), recognized an issue for people with hand limitations and self-pleasure.
“Many people with hand limitations couldn’t masturbate or use the toys on the market due to dexterity, grip, aging issues, etc. People all over the world couldn’t access the human right of pleasure and we wanted to change that for the better,” they say. They also wanted to ignite a conversation around the intersection of sexuality and disability that’s often overlooked.
Both Gurza and Morrison, who aren’t sex toy designers, were naive about the process, which they say allowed them to press on without worrying about the hurdles. In an initial internal survey conducted by the pair, 92% of respondents said that they’d want an accessible sex toy and, from there, they contacted leading sex toy researcher Dr Judith Glover to develop the project.
They raised capital partly through community efforts, first in 2018 with a small GoFundMe campaign to do the research and work with Glover. Then, they applied to a disability tech accelerator in Australia called Remarkable. “They were instrumental in helping us learn how to market our product and they really helped us move things along,” says Gurza.
Then, in 2020, Bump’n was awarded $20,000 by an Australian disability non-profit called Wheels in Motion. “We were so happy, and it really helped to keep the project going,” says Gurza. Bump’n has continued that community-based work too and, in 2020, it curated a book of stories from disabled people and poured the profit into creating the toys. “We like to say we’re a small company with big dreams, and that holds true, but the community support has really been a big driver for us,” says Gurza.
That community support has proved essential for Bump’n, but Gurza says that no single channel of raising capital was better than another. When starting out, it’s important to explore various streams of funding to work out what’s best for you, your business, and your future—you may even want to combine multiple types of funding to get what you need. “We took any help we could get because we really believe in the project and mission that pleasure is a human right that we all deserve access to,” Gurza says.
To anyone in a similar position, Gurza recommends that you do your research. “Don’t be afraid to ask for help and don’t be afraid to learn. Especially if you’re entering into a community that’s been historically overlooked—be open to having your perceptions changed. Be prepared for bumps along the way and understand that the process will not be a linear one.”
Takeaway. Turning to your own community can be a valuable way of raising funds and support for your business.
Terms To Know Before You Start Out
Angel investor An angel investor or angel is a high-net-worth individual who typically makes investments in the early stages of a company.
Business plan A business plan is what you take to a potential investor to show how much money you need, where you’re going to spend it, what’s next for you, and what they’re investing in.
Capital Pretty simple—capital is basically the amount of cash or assets held by you as an organization.
Crowdfunding Many LGBTQ+ businesses start their journey with crowdfunding on platforms like Kickstarter. Basically, your community invests small amounts of money to help you get started.
Projections Financial projections predict your company’s financial performance over time. They’re often used to show investors what you believe your future will look like.
Seed round In a seed round, an investor will invest capital in a startup company in exchange for some stake. It’s often one of the very first rounds of funding.
Business plan basics
What’s a business plan? Why do you need one?
A business plan is a document that outlines why you’ve started your business and how you plan to grow it. Some people use them simply as internal documents to refer back to, but most plans are created to share with anybody who might consider helping you out with funding: grant applications, loan providers like banks, or a venture capitalist investing in your business for a portion of equity. They’ll want to see that your offering is good, but also that you have detailed plans and projections for how their money will be used.
What should you include?
There’s no one-size-fits-all formula; even though there are online templates available (see the resources below), it’s unlikely that two plans will ever look the same. But here’s some of the basic information that you’ll need to include.
Executive summary. A brief outline of your business, the market gap it addresses, and insight into the potential revenue it could generate.
Market analysis. Any research you’ve done into your industry, as well as any customer research like surveys or focus groups.
Main products or services. Outlines of the product or service you’re looking to launch and information on why and how it fulfills a particular customer need.
Financial projections. A comprehensive breakdown of your costs (both one-off and recurring), as well as initial revenue projections, such as:
Sales forecast. A projection over 3 years, with the first year divided monthly.
Expenses budget. An estimate of how much it’ll cost to make those sales, divided into fixed costs (like rent and salaries) and variable costs (like promotional spend).
Cash-flow statement. A 12-month projection that shows estimated monthly cash incomings and outgoings.
Projected balance sheet. A breakdown of all your assets (like inventory, equipment, and outstanding invoices) and liabilities (like unpaid invoices you owe or loan repayments).
Profit and loss statement. This takes into account your sales projections, expenses budget, and cash-flow statement to reflect what you expect in profit or loss for each of the 3 years that you’re projecting for.
Useful things to check out
Bplans. Bplans has more than 500 business plan templates across numerous industries and sectors, plus useful advice, tips, and tools.
LivePlan. LivePlan creates visual, infographic-led business plans—many of which are one-page long.
Y Combinator. “Y Combinator is an amazing resource,” says Robyn Exton. “It’s really operational about how to run a business and I strongly recommend anyone to apply for Y Combinator.”
Words of Pride. “Our greatest resource is each other,” says Densil Porteous. “At Pride Fund 1, we have a byproduct called Words of Pride. I travel the country, meet with venture founders and connect them. You need a community.”
AngelList. “You can use AngelList to see who’s been putting money into analogous propositions in different industries,” says Exton.