When Til Klein and Jochen Beutgen met Gaingels, a syndicate of angel investors in the US that supports LGBTQ+ founders, they wondered why no other company wanted to do the same for Europe’s LGBTQ+ startup community. Five years later, when such a company still did not exist, Klein and Beutgen decided to try to launch their own.
In 2023, the pair launched Identity.vc, a venture firm that invests in early-stage companies with at least one founder or executive who identifies as a member of the LGBTQ+ community. The Berlin-based company is currently raising €50 million in its debut fund and has closed €15 million so far. The founding partners also brought in Mari Luukkainen, who has previous operating and investment experience, as principal.
The company writes checks ranging from €250,000 to €1.5 million to companies from pre-seed to the Series A stage. The company is sector agnostic and invests in Europe and beyond. Identity.vc has supported four companies so far, including eco.mio, a software plugin that helps companies manage the environmental impact of business travel, and Paxton, an AI legal technology company.
“The majority of LGBTQ+ founders: They don’t engage with investors because they feel they could be at a disadvantage,” Klein told TechCrunch. “We think this is a big mistake and (it means) you don’t have a trusting relationship with your investors. An unhappy investor, you don’t want to have on your closing table. You have to be able to be yourself.”
Klein said he’s gotten a lot of positive feedback on the strategy, and fundraising hasn’t been too difficult so far. He added that LPs are looking for funds that offer this type of diversity. He cited a recent Morgan Stanley survey that found that 45% of US investors are looking for ways to support LGBTQ+ founders.
It’s not surprising that investors see value in supporting diverse teams – many studies show that diverse teams outperform non-diverse teams – but it’s still exciting to see that LPs and the European startup community have embraced these companies. Identity.vc’s narrative is a bright spot when some companies focused on investing in various founders have struggled to raise in the US and others have experienced legal pressure for theses.
“So far we’ve had a lot of support from other investors and VCs. They like working with us and our experience,” said Klein. “When I talk to regular funds, they also understand that they need to be more diverse. They see us as an opportunity to increase diversity. We haven’t had that reaction, maybe because Europe is more advanced in investing in diversity.
While the company drew inspiration from Gaingels, Klein says he deliberately decided to do things differently. He said he wanted to raise traditional funds, rather than syndicates, to make it easier to invest.
The size of the fund is also deliberate. While some have suggested that the company start with a smaller amount of funding, say €20 million, Klein says he doesn’t want to do that. They want a bigger debut fund to make a statement about how serious they are about the opportunity. Klein added that they also want to collect high management fees, in order to have enough capital to start building a European community for LGBTQ+ founders and investors.
“In the US, there’s a real LGBTQ+ investor community – that’s not the case in Europe,” Klein said. “We need to have resources and people who can do community work.”
The company launched a Slack channel for the community, which currently has 300 members. The company has also held events in Madrid, Amsterdam and Paris to create a space where LGBTQ+ founders and investors can meet and connect. He said the initiative will not only help the company build a community, but also help deal flow for Identity.vc and help startups find other sources of capital.
“We’re going to bring the local community together, and you’d be surprised how few LGBTQ+ founders and investors there are,” Klein said. “We can create value by bringing local people together. If there are early stage startups that are too early for us and angel investors, I can bring them together.
The company has only raised 30% of its funding goal so far, but it’s already starting to make a difference – one that will continue to grow as the company raises more capital.
“There are various reasons why we think it’s needed,” Klein said of Identity.vc’s existence. “We are very confident that we can beat the performance due to the fact that the performance driven by diversity and supporting the LGBTQ+ community gives us unique access to startups and access to attractive offers.”
