When Til Klein and Jochen Beutgen got here across Gaingels, a US-based consortium of angel investors supporting LGBTQ+ founders, they wondered why there wasn’t a company willing to do the same for Europe’s LGBTQ+ startup community. Five years later, when no such company still existed, Klein and Beutgen decided they need to try starting one themselves.
In 2023, the couple founded Identity.vc, a venture firm that invests in early-stage firms where at least one founder or executive identifies as a member of the LGBTQ+ community. The Berlin-based company is currently raising €50 million for its debut fund and has closed €15 million so far. The founding partners also hired Mari Luukkainen, who has previous operational and investment experience, as lead director.
The company issues checks ranging from €250,000 to €1.5 million for firms from seed to Series A. The company is industry agnostic and invests in Europe and beyond. To date, Identity.vc has backed 4 firms, including eco.mio, a software plugin that helps firms manage the environmental impact of business travel, and Paxton, an AI-based legal technology company.
“Most LGBTQ+ founders: They don’t disclose this to their investors because they think it could be a disadvantage,” Klein told TechCrunch. “We think that’s a big mistake and [that means] you do not have that trusting relationship with your investors. Those investors who don’t love that, you don’t need to have on your cap table. You should give you the chance to be yourself.”
Klein said they have received a lot of positive feedback on the strategy, and fundraising has not been too difficult so far. He added that LPs are looking for funds that give them that type of diversification. He cited a recent Morgan Stanley study that found that 45% of U.S. investors looking for a way to support LGBTQ+ founders.
It’s no wonder that investors see value in supporting diverse teams – many studies showed that diverse teams outperformed non-diverse teams — but it’s still refreshing to see long-term investors and the European startup community embracing the company. Identity.vc’s narrative is a vivid spot at a time when some firms focused on investing in diverse founders have struggled to raise capital in the U.S., and others have faced legal pressure over their theses.
“So far, the program has been very supportive to investors and other venture capital funds. They love working with us and our experience,” Klein said. “When I talk to mainstream funds, they know they need to be more diverse. They see us as an opportunity to become more diverse. We haven’t seen that response yet, maybe because Europe is so much more advanced in terms of investing in diversity.”
Although the company drew inspiration from Gaingels, Klein said they deliberately decided to do things a little in another way. He said they wanted to raise a traditional fund quite than a syndicate to facilitate further investment.
The size of the fund was also intentional. While some had really useful 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 show how seriously they were taking the opportunity. Klein added that in addition they wanted to charge a high management fee so that they had enough capital to start building a European community for LGBTQ+ founders and investors.
“There is a real LGBTQ+ investment community in the U.S. — that’s not the case in Europe,” Klein said. “We need to have the resources and people who can do the community work.”
The company launched a Slack channel for the community, which now has 300 members. The company has also hosted events in Madrid, Amsterdam, and Paris to create spaces where LGBTQ+ founders and investors can meet and connect. He said these initiatives not only help their company build community, but may also help with deal flow for Identity.vc, in addition to help startups find other sources of capital.
“We’re bringing the local community together, and you’d be surprised how little LGBTQ+ founders and investors are connected to each other,” Klein said. “We can 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 connect them.”
The company has only raised 30% of the fund’s goal amount so far, but it has already began to show results – which can proceed to grow as the company raises more capital.
“There are a lot of reasons we think this is necessary,” Klein said of Identity.vc. “We truly believe we can do better because diversity-driven outcomes and supporting the LGBTQ+ community give us unique access to startups and interesting opportunities.”