4 months ago
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When Til Klein and Jochen Beutgen came across Gaingels, the U.S.-based syndicate of angel investors backing LGBTQ+ founders, they wondered why there wasn’t a firm looking to do the same for the European LGBTQ+ startup community. Five years later, when a firm like that still didn’t exist, Klein and Beutgen decided they should try to launch one themselves.
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 firm is currently raising €50 million for its debut fund and has closed on €15 million thus far. The founding partners also brought on Mari Luukkainen, who has prior operating and investing experience, as a principal.
The firm writes checks that range from €250,000 to €1.5 million into companies from the pre-seed to Series A stages. The firm is sector agnostic and invests in Europe and beyond. Identity.vc has backed four companies thus far, including eco.mio, a software plugin that helps companies manage the environmental impact of their business travel, and Paxton, an AI legal tech company.
“The majority of LGBTQ+ founders: They are not out to their investors because they feel that could be a disadvantage,” Klein told TechCrunch. “We think that is a big mistake and [that means] you don’t have this trusted relationship with your investors. Those investors who don’t like it, you don’t want to have them on your cap table. You should be able to be yourself.”
Klein said they’ve gotten a lot of positive feedback on the strategy, and fundraising hasn’t been too difficult thus far. He added that LPs are looking for funds that give them this kind of diversification. He cited a recent Morgan Stanley survey that found that 45% of U.S. investors were looking to find a way to back LGBTQ+ founders.
It’s not surprising that investors see the value in backing diverse teams — numerous studies have shown diverse teams outperform non-diverse teams — but it’s still refreshing to see that LPs and the European startup community have embraced the firm. Identity.vc’s narrative is a bright spot at a time when some firms focused on investing in diverse founders have struggled to raise in the U.S. and others have come up under legal pressure for their thesis.
“So far it’s been very supportive from investors and other VCs. They love to work with us and our experience,” Klein said. “When I talk to regular funds, they also know they should be more diverse. They see us as an opportunity to increase their diversity. We have not yet experienced that backlash, maybe because Europe is so much more advanced when it comes to diversity investing.”
While the firm got inspiration from Gaingels, Klein said they intentionally decided to do things a little bit differently. He said they wanted to raise a traditional fund, as opposed to a syndicate, so that it would make follow-on investments easier.
The fund size was intentional, too. While some people recommended that the firm start with a smaller fund, say €20 million, Klein said they didn’t want to do that. They wanted a larger debut fund to make a statement of how serious they were about the opportunity. Klein added that they wanted to collect a high management fee, too, so that they would have enough capital to start to build the European community for LGBTQ+ founders and investors.
“In the U.S., there is 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 firm launched a Slack channel for the community, which currently has 300 members. The firm has also held events in Madrid, Amsterdam and Paris to create spaces where LGBTQ+ founders and investors can meet and connect with each other. He said these initiatives not only help their firm build community but can also help with deal flow for Identity.vc and help startups find other sources of capital, too.
“We will bring together the local community, and you’d be surprised how little LGBTQ+ founders and investors are connected,” Klein said. “We could create value by bringing local people together. If there is an early-stage startup that is too early for us and an angel investor, I can bring them together.”
The firm has only raised 30% of its fund target so far, but it has already started to make a difference — one that will continue to grow as the firm brings in more capital.
“There are multiple reasons why we think it’s needed,” Klein said about Identity.vc’s existence. “We believe strongly we can outperform because of the fact that diversity-driven performance and backing the LGBTQ+ community give us a unique access to startups and access to interesting deals.”
