Crunchbase announced Thursday that it is starting to track the amount of venture capital dollars invested in founders who identify as part of the LGBTQ+ community.
The new data source is an addition to Crunchbase’s Diversity Spotlight, which tracks the amount of venture capital funding raised by founders within marginalized communities. Similar to its other diversity tags, LGBTQ+ founders will have to self-identify and opt-in to wanting their information publicly shared. Crunchbase said its intention is to help raise awareness of LGBTQ+ founders looking for funding, as well as offer data and transparency around investments within the community. The announcement coincides with the first day of Pride Month.
“Having concrete data helps in advocating for policy changes, funding initiatives and resource allocation to support LGBTQ+ entrepreneurs,” said Ryan Husk, Crunchbase’s director of business development. “It enables us to make evidence-based arguments for greater equity and access within the startup ecosystem.”
It was estimated by Backstage Capital that less than 1% of all VC dollars are raised by companies with founders openly within the LGBTQ+ community. Members of the community often face hurdles while fundraising, whether it’s dealing with openly transphobic investors or code-switching to hide one’s sexuality in trepidation of homophobia.
“I’ve heard founders say they delete any mention of same-sex partners, advocacy work or involvement in anything LGBTQ+ while raising capital as they fear investors will see it during due diligence,” said Chasing Rainbows General Partner Patrick Driscoll.
He said he’s thrilled that Crunchbase is starting to track this information, as did Kate Tamera, the trans founder of the gender-affirming startup Euphoria, who called it “huge” that Crunchbase has decided to track the funding.
“Because this data hasn’t been well tracked [historically], it’s hard to make definitive statements about the disparities and the success stories, so this effort will help shine a light on the activity within the space and the work that needs to be done,” she told TechCrunch+.
Crunchbase launched its Diversity Spotlight tag in 2020, and as of today, there are 20 different tags focused on race, ethnicity, gender and sexual identity to help bring more transparency into venture capital investing trends. Crunchbase started prioritizing the addition of LGBTQ+ tags late last year and said there had been an increased demand for such categorizations, especially given the existence of other identity markers within the Diversity Spotlight.
Husk said that one of the main challenges in tracking this data has been in balancing visibility and respecting the privacy of individuals on the Crunchbase platform. To address this, he said the team created a new process for reviewing each tag a company requests to opt in to and worked with nonprofits to ensure a respectful approach.
“As we look toward the future, we anticipate that our biggest challenge will be managing the growth of this initiative, and as it expands, we may need to automate our current process, which has been manual so far,” he said. “However, we are excited by this prospect and eager to adapt and refine our methods to help scale the program.”
Crunchbase is one of the few data firms tracking venture allocations by race, ethnicity and now sexual orientation. It’s an arduous task, and not without faults, though its insights remain valuable as inequity within the venture ecosystem remains indisputable. Aside from tracking data, Tamera said she would like to see more coverage of LGBTQ+ founders; it is Pride Month, but coverage of such founders should be the norm rather than an exception, she said.
Husk also said the platform wished to empower LGBTQ+ entrepreneurs, bridge opportunity gaps and foster a “heightened sense of belonging and representation.” But as Driscoll pointed out, although there are some founders open to sharing their sexuality with investors and the broader tech community, there is still much apprehension among those who choose not to. He, too, hopes to see more initiatives connecting the LGBTQ+ community, similar to those of other underrepresented groups.
“Our historical persecution has made us resilient fighters,” Driscoll said. He said that hopefully, Crunchbase’s next system shines light and visibility into the struggle of LGBTQ+ founders. “Once the greater tech and VC ecosystem takes note of our resilience and our power in the overall macroeconomy, things will start to change.”