From the flexibility of being your own boss to working toward financial freedom, entrepreneurship holds so much promise, especially for LGBTQ+ women, many of whom may have never envisioned themselves as wealthy.
Fewer than 1 in 5 women hold C-suite positions.
LGBTQ+ women entrepreneurs promote economic development and diversity, equity, and inclusion. According to a 2021 LGBTQ-Owned Small Businesses study, LGBTQ+ small businesses were more likely to be women-owned and immigrant-owned than non-LGBTQ+ businesses.
Unfortunately, LGBTQ+ women continue to face bias, discrimination, and financial exclusion in ways that can hinder their dreams of becoming successful entrepreneurs.
The Impact of LGBTQ+ Women-Owned Businesses
More than 1 million business owners in the United States identified as LGBTQ+ in 2022 — leaving a big impact on the U.S. economy. National Gay & Lesbian Chamber of Commerce (NGLCC) certified businesses alone have added more than 33,000 jobs to the U.S. economy annually.
These NGLCC-certified LGBTQ+ business owners are defying odds that are often stacked against new entrepreneurs. While most businesses will close within five years of opening, these LGBTQ+ businesses are averaging 12 years in business.
Despite this progress, less than one-third of NGLCC-certified businesses are led by women. LGBTQ+ business owner demographics mirror what we see nationally: White cisgender men represent the majority of these business owners.
The economic impact of LGBTQ+ owners cannot be understated: Their revenue is estimated to contribute nearly $2 trillion to the U.S. economy. We desperately need more women LGBTQ+ entrepreneurs at the highest levels of business and financing.
Understanding the Challenges Facing LGBTQ+ Women in Business
Why aren’t there more LGBTQ+ women entrepreneurs? Well, several factors may contribute to the shortage, including gender bias and discrimination. Whether intentional or ungrained, bias and discrimination create funding challenges that can make or break a business.
Bias & Discrimination
Entrepreneurship appeals to many LGBTQ+ women in corporate America who have been subjected to discrimination and sexual harassment in the workplace. It’s well-known that bias and discrimination are embedded in hiring, promotion, and termination decisions.
Unfortunately, leaving corporate America doesn’t solve the problem. LGBTQ+ women still encounter bias and discrimination as entrepreneurs. For LGBTQ+ business owners, discrimination also plays a part in how much or how little funding they receive. The data suggest that LGBTQ+ entrepreneurs need more financial support than their peers but aren’t getting it.
According to Business News Daily, although LGBTQ+ business owners applied for funding at the same rates as heterosexual business owners, their applications are less likely to be approved (46% vs. 35%). They are also more likely to report negative impacts from the COVID-19 pandemic (61% reported losing money compared to 48% of heterosexual owners) but were less likely to receive pandemic relief.
Limited Access to Capital
It’s clear that women and LGBTQ+ business owners, whether in start-ups or established businesses, are being denied access to much-needed capital. Regarding the distribution of venture capital (VC) funds for start-ups, less than 1% went to LGBTQ+-owned businesses, and only about 7% went to women business owners, according to the StartOut Index.
LGBTQ+ business owners also experience the same disappointment when applying for non-VC business loans. Although illegal, lenders sometimes discriminate against business owners based on gender and sexual orientation by refusing to approve their loan applications. If their loans get approved, they may be charged a higher interest rate than men or heterosexual business owners, creating more of a financial burden.
Resources for LGBTQ+ Women Entrepreneurs
If you’re an LGBTQ+ woman looking to start or grow a business, don’t be discouraged. There are several organizations, funding sources, and mentorship programs available.
Organizations
Reaching Out MBA creates resources and networks to help LGBTQ+ women achieve their business goals, including in their annual Out Women in Business Conference, which includes discounts for LGBTQ+ students.
The NGLCC is an advocacy organization that offers businesses the opportunity to become Certified LGBTBE companies, which opens the door for networking with consumers who want to do business with certified organizations.
OutBuru connects LGBTQ+ employees with employment opportunities to support their career development. For example, users can create a professional profile accessible to diversity recruiters dedicated to finding the right fit for their organizations.
Funding Sources
Diversity VC set out to hold venture capital firms to high DEI standards. It has closed DEI gaps by connecting entrepreneurs with VC professionals and facilitating internships.
Backstage Capital is on a mission to dramatically improve the number of minority-owned businesses that receive VC funding. The organization has already invested in more than 200 of these businesses.
LGBT Capital created the LGBT Diversity Investment Index and an accompanying guide to help investors make their institutional investments more LGBT-inclusive.
Mentorship Programs
Out in Tech was established to support LGBTQ+ tech workers. Now, the 50,000-member community champions LGBTQ+ work via Diversity Corps and Out in Tech U.
StartOut understands the importance of financial capital and networking. The group has facilitated over 600 introductions between LGBTQ+ business owners and investors and over 1,200 mentorship matches.
Out Professionals (AKA “Out Pro”) has led networking and education events for LGBTQ+ business owners for 40 years, even holding virtual networking mixers during the COVID-19 pandemic.
The Future of LGBTQ+ Women in Entrepreneurship
LGBTQ+ women deserve to pursue financial freedom and employment flexibility free from harassment and discrimination. More LGBTQ+ women entrepreneurs are needed, but biased and discriminatory practices create financial hurdles that entrepreneurs struggle to overcome.
Funders need to recognize the incredible return on investment from supporting LGBTQ+ businesses, both economically and socially. More transparency is needed in venture capital and loan approval decisions to understand the extent of the issue. Additionally, we must create legislation that protects these and other marginalized businesses from discriminatory practices.
Sources
America’s LGBT economy. (2022). National Gay & Lesbian Chamber of Commerce
Damien, Hadassah. (2022). As a queer woman, I never thought I’d be able to buy a home or build wealth — but I did, and a perspective shift made all the difference. Insider
Ellsworth, Diana, et al. (2020). How the LGBTQ+ community fares in the workplace. McKinsey & Company
Fox, Michelle. (2023). LGBTQ small business owners struggle to find financing. CNBC
Freedman, Max. (2023). Do LGBTQ-owned businesses face more obstacles obtaining funding? Business News Daily
Johnson, Travers. (2022). 25 LGBT women business and leadership pioneers you should know. Queerency
StartOut Index. (2022). StartOut
This pride month, the SBA celebrates the LGBTQ+ small business community. (2022). U.S. Small Business Administration
Watson, Spencer, et al. (2021). LGBTQ-owned small businesses in 2021. Lgbtq-economics.org
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