Fighting structural barriers to economic opportunity for LGBTQ+ people

As people in many countries around the world celebrate Pride month, we’re sharing LGBTQ+ and allied voices from our community—like stories of Kiva borrowers and resources recommended by Kiva employees.

We also wanted to connect with other organizations who are doing great work supporting a more inclusive world, so naturally we talked to Bill Burckart and Megan Kashner from Colorful Capital. Colorful Capital aims to provide capital support to businesses founded and led by members of the LGBTQ+ community. Like Kiva, they aim to strengthen economic opportunity by filling financing gaps. Here’s what they had to say.

Can you highlight some of the most prevalent barriers to achieving economic equity when it comes to gender identity and expression and/or sexual orientation?

We have known for some time that coming out and identifying along the LGBTQ+ spectrum can often cause or exacerbate barriers to wealth and financial stability. We also know that these impacts run from family rejection, to denial of employment opportunities, to housing discrimination, to differentials in incarceration and institutionalization rates, to educational barriers, unsafe conditions, and more.

Paths to economic opportunity and stability can come in the form of education, employment, homeownership and business ownership and leadership. Barriers exist for LGBTQ+ people at every level on this list, and are complicated and exacerbated by structural racism, misogyny, transphobia, xenophobia, and so many other forces of a society grounded in exclusion.

In the United States, the LGBTQ+ community is, in fact, not a singular community. It is as varied as the U.S. itself in terms of identity, geography, economic foundations, education, employment, family composition, and more. When we focus in on business ownership and leadership as one of the most promising avenues to personal economic strength and stability, historic as well as current structural racism, homophobia, and gender bias rear their heads high.

"Paths to economic opportunity and stability can come in the form of education, employment, homeownership and business ownership and leadership. Barriers exist for LGBTQ+ people at every level on this list."

Accessing capital is essential to both establishing and scaling a business. What implications exist for those of us who may have to work harder to overcome systemic barriers?

There is bad news and good news on this front. Let’s start with the bad news. Our findings indicate that investors’ hesitancy to “take a chance’’ on underrepresented founders often manifests in an unwillingness to invest in the absence of prior commitment by other investors.

Additionally, several founders shared frustration with the unrealistic expectations and lack of transparency exhibited by VCs. Not only were founders often required to have a proven track-record of entrepreneurship, they were time and again denied meaningful feedback, sometimes receiving no follow-up at all. Beyond these broad hurdles, founders encountered further resistance in the form of exclusion and barriers to access based upon various elements of their intersectional identities and often struggled to pinpoint the exact cause of the resistance.

The good news is that we have defined the major hurdle to accessing capital: the reticence of VC firms and angel investors to engage as the lead funder or to pledge investment for a venture led by an LGBTQ+ leader before a lead funder has been identified. This is a structural barrier that we can address.

By doing so we can demonstrate the power of LBGTQ+ investors and allies taking on the leadership roles so needed in early stage funding rounds in support of LGBTQ+ founders and leaders.

Megan Kashner is the co-founder of Colorful Capital

What’s one thing that anyone reading this could do today to make the world more inclusive?

Our research is clear on this point: an opportunity has come into focus for those who can step in and identify the talent, focus in on the potential of LGBTQ+ founders, lead funding rounds, provide salient and reflective feedback, and do the work of venture capital for these founders who are so often on the outside of the system completely.

Please share any resources you’ve found to help provide guidance and support to LGBTQ+ folks.

• The Resources page on Colorful Capital’s website, which includes links to a number of reports covering the LGBTQ+ experience in terms of economics and wealth, and access to funding.
• Barriers and Exclusions: A Baseline study on the LGBTQ+ Experience in Venture Funding (January 2022) by Martin De Leon and Professor Megan Kashner, which has provided much of the background for these points and positions.
• Colorful Capital’s twitter account, @ColorVC

You can find many more resources in this LGBTQ+ resources guide.