The ins and outs of starting a business are challenging to any aspiring entrepreneur but are even harder to overcome for LGBTQ+ entrepreneurs.
While there’s much to celebrate about milestones achieved for the LGBTQ+ community, there’s still much more work to do in the business world for LGBTQ+ equality. Although a 2020 Supreme Court ruling nationally outlawed employee firings based on gender or sexual orientation, it is still legal in 27 states to be fired for identifying as LGBT.
In our hometown of Kansas City, which falls under the jurisdiction of both Kansas and Missouri’s state governments (and similar to many other conservative-majority states in the U.S.), no local laws exist to protect LGBTQ+ business owners, and anti-discrimination protections for LGBTQ+ employees are slim.
Such inequity can make it difficult for an LGBTQ+ entrepreneur to feel safe being out or pursuing business opportunities in line with their identity. However, raising awareness of the unique challenges facing LGBTQ+ entrepreneurs is a crucial step to creating and circulating supportive resources for the LGBTQ+ business community.
Barriers facing LGBTQ+ entrepreneurs
Whether it’s accessing capital and funding, obtaining licenses, pursuing prospects and sales, hiring employees or receiving federal aid and protection, LGBTQ+ entrepreneurs are statistically more likely to encounter disadvantages, whether due to social bias or lack of federal and state support.
So much of entrepreneurial success depends on building a business network, especially the ability to locate mentors and role models. According to StartOut — a nonprofit organization committed to increasing the number, diversity and impact of LGBTQ+ entrepreneurs through economic empowerment, funding, research and programming — the visibility of LGBTQ+ business role models and mentors, as well as other resources for finding them, are few and far between for aspiring LGBTQ+ entrepreneurs.
StartOut’s 2016 study, “The State of LGBT Entrepreneurship in the U.S.,” also reports that almost 40% of LGBTQ+ entrepreneurs said they chose not to self-identify as members of the LGBTQ+ community, either because it wasn’t deemed relevant or they were concerned doing so might hurt their chances of receiving capital.
Consequentially, many LGBTQ+ entrepreneurs have migrated from areas where they may face discrimination and intolerance, leaving an immeasurable gap in the business communities of those cities. Statistics like these illustrate the factors that may lower LGBTQ+ entrepreneurial visibility for aspiring business owners in the community and overall contribute to a cycle of disadvantage.
Intersectionality and accessing capital in the LGBTQ+ entrepreneurial ecosystem
LGBTQ+ business owners also aren’t single-faceted; their experiences occupy a wide spectrum of identities including race, gender, class, mental health, age, religion and physical mobility. Any one of these facets of experience, or multiple at once, may contribute to individual challenges when it comes to meeting the many requirements needed to start and maintain a business.
Access to venture capital and angel investment funds as an LGBTQ+ business owner is particularly difficult, a survey conducted by Chicago Booth Review and StartOut reports — and that gap of disadvantage only increases for those of marginalized gender and race.
StartOut’s study also found that lesbian entrepreneurs were at a distinct disadvantage compared to gay, male business owners, with just 3% of lesbian-owned businesses reporting revenue over $5 million compared to 12% for gay men.
“[Research found that] gender trumps LGBT status in adding difficulty to the funding process,” StartOut’s findings claimed. “In this sample, approximately 38% of both male and female entrepreneurs raised outside capital to help fund their business — but 70% of female LBT entrepreneurs raised less than $750K while 47% of male GBT entrepreneurs raised more than $2M, mirroring the gender funding gap seen in entrepreneurship in general.”
LGBTQ+ entrepreneurship poses enough challenges on its own, but LGBTQ+ entrepreneurs of color are even more likely to face obstacles unique to racial marginalization.
A recent report from the National Bureau of Economic Research showed that Black-owned businesses were hit the hardest by the pandemic in 2020, putting 41% of Black business owners out of business (440,000 total) as opposed to 17% of white business owners. While the number of businesses owned by Black women has grown by 163% since 2007 — six or seven times the national average — venture capital is still granted to mostly white, male-owned businesses, with only 0.27% of venture capital investment going to Black women. A survey from ProjectDiane found that Black and Latinx women combined received just 0.64% of venture capital investment between 2018 and 2019.
These reports, just a few of many, show that the LGBTQ+ entrepreneurial experience is not a monolith, and that the struggles faced by queer entrepreneurs are best understood – and remedied – through an intersectional lens.
Resources to help LGBTQ+ entrepreneurs and allies
For as many obstacles as LGBTQ+ business owners may encounter, there’s a growing number of resources and practices designed to offer aid in supporting LGBTQ+ businesses — whether you’re an LGBTQ+ entrepreneur yourself or an ally looking to build a more inclusive economic ecosystem.
Below are some suggested resources and practices for LGBTQ+ entrepreneurs and supporting organizations.
Help business owners get their LGBTBE certification.
An LGBTBE certification from the National LGBT Chamber of Commerce verifies that a business is majority owned (at least 51%) by LGBTQ+ citizens. LGBTBE certification enables LGBTQ+ business leaders to connect with other LGBTQ+ businesses both locally and nationwide, and it offers resources, built-in consumers and opportunities to scale.
Integrate LGBTQ+ resources into your network.
The Mid-America LGBT Chamber of Commerce, a local resource for LGBTQ+ businesses and allies, specializes in helping Midwestern LGBTQ+ businesses achieve certification. The Mid-America LGBT Chamber also hosts networking events to connect members, participates in LGBT-focused nonprofit work and connects entrepreneurs to a larger web of businesses in the region.
Collect demographic information in your community.
Keeping up to date on demographic information within your network of entrepreneurs and resource partners allows for a greater understanding of the diverse makeup of your ecosystem. If you choose to go the route of collecting data, it’s best to research the most current best practices for collecting that information. The provided verbiage can help the members of your community feel included and represented as a part of your organization.
Anonymous surveys may also allow you a greater understanding of what’s working and what’s hindering your entrepreneur support network. Allowing a safe space for business owners and resource partners to voice their concerns is a positive first step to creating a more inclusive and welcoming environment.
Build trust in the business ecosystem.
One of the most important factors of creating an inclusive space is to initiate open and thoughtful conversation, one that invites those in your network to share their experiences and their insight on diversity, equity and inclusion. Many communities struggle with creating spaces that prioritize inclusivity or with taking the next action steps beyond an initial conversation.
Committing to concrete actions such as unconscious bias training, collaboration with minority, women and LGBTQ-owned businesses, and internal diversity workshops are all promising first steps to creating a more diverse and inclusive entrepreneurial ecosystem.
The future is inclusive entrepreneurship
If any of these challenges resonate with your experience supporting entrepreneurs in your community, know there are many resources to help. Taking the first step of identifying LGBTQ+ business owners and creating a space for sharing their experiences, insight and challenges are great ways to both educate yourself and to help your entrepreneurs understand that they’re not alone.
SourceLink is here to help you connect to resources and to build an effective and inclusive entrepreneurial ecosystem. Contact us at [email protected] to learn more, and check back here for more information as we continue the conversation around diversity, equity and inclusion.