When Til Klein and Jochen Beutgen met Gaingelsthe US-based syndicate of angel investors that backs LGBTQ+ founders, wondered why there wasn’t a company looking to do the same for the European LGBTQ+ startup community. Five years later, when such a company did not yet exist, Klein and Beutgen decided they should try to launch one themselves.
In 2023, the couple launched Identity.vc, a venture capital 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 first fund and has closed €15 million so far. The founding partners also brought on board Mari Luukkainen, who has previous experience in operations and investments, as a director.
The firm writes checks ranging from €250,000 to €1.5 million to companies from pre-seed to Series A. The firm is sector agnostic and invests in Europe and beyond. Identity.vc has so far backed four companies, including eco.mio, a software plugin that helps companies manage the environmental impact of their business travel, and Paxton, an AI-based legal technology company.
“Most LGBTQ+ founders don’t tell their investors because they feel it could be a disadvantage,” Klein told TechCrunch. “We believe it is a big mistake and [that means] doesn’t have this relationship of trust with its investors. Those investors who don’t like it, you don’t want them on your cap table. You should be able to be yourself.”
Klein said they’ve received a lot of positive feedback about the strategy and fundraising hasn’t been too difficult so far. He added that LPs are looking for funds that give them this type of diversification. He cited a recent Morgan Stanley survey that found that 45% of American investors were looking to find a way to support LGBTQ+ founders.
It’s no surprise that investors see the value in backing diverse teams: numerous studies have shown that diverse teams outperform non-diverse teams, but it is still refreshing to see that LPs and the European startup community have embraced the company. Identity.vc’s narrative is a bright spot at a time when some companies focused on investing in diverse founders have fought to raise in the US and others have come under legal pressure for his thesis.
“So far it has had great support from investors and other venture capitalists. They love working 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 haven’t experienced that reaction yet, perhaps because Europe is much further along when it comes to investing in diversity.”
While the company was inspired by Gaingels, Klein said they intentionally decided to do things a little different. He said they wanted to create a traditional fund, rather than a syndicate, to facilitate later investments.
The size of the fund was also intentional. While some people recommended that the company 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 clear how serious they were about the opportunity. Klein added that they also wanted to charge a high management fee, so they would have enough capital to start building out the European community of LGBTQ+ founders and investors.
“There is a real LGBTQ+ investor community in the US; 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 organized 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 his firm build a community, but can also help with deal flow for Identity.vc and help startups find other sources of capital.
“We will bring together the local community and you would be surprised how unconnected LGBTQ+ founders and investors are,” 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.”
So far, the company has only raised 30% of its funding target, but it has already started to make a difference, a difference that will continue to grow as the company brings in more capital.
“There are multiple reasons why we believe it is necessary,” Klein said of Identity.vc’s existence. “We strongly believe that we can outperform due to the fact that diversity-driven performance and support for the LGBTQ+ community give us unique access to new companies and interesting offerings.”