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Most founders of tech startups who identify as LGBTQ+ in the U.K. find themselves unable to share their sexual orientation or gender identity with investors, according to research published Tuesday.
A survey from Proud Ventures, a network of LGBTQ+ venture capitalists and angel investors, found that 75% of LGBTQ+ startup founders and 79% of investors conceal their sexual orientation or gender identity with their peers.
Proud Ventures, with the backing of Founders Factory and Investec Wealth, surveyed 118 founders and 61 investors based in the U.K. for the research. It is the first report of its kind in the U.K. startup community, according to Proud Ventures.
Of the founders who conceal their identities from investors, 45% said they felt it wasn’t relevant to the situation. Some 27% said they didn’t feel comfortable sharing that information with investors, while 18% feared it may harm fundraising efforts.
Research has shown that concealing a minority sexual or gender identity can lead to worse health outcomes, including substance abuse and depression, the report added.
A number of startup founders reported facing discrimination as a result of their LGBTQ+ identity. One anonymous founder cited in the research detailed how a cisgender bisexual founder was the target of a drunken slur from an investor on their sexual identity after coming out.
The investor subsequently “sent an email saying he was passing on investing because there wasn’t a very good, quote ‘cultural fit’ with the fund he represented,” this founder said, according to the Proud Ventures report.
“Whilst much progress has been made in the last decade on diversity in tech, the Proud Ventures report shows that LGBTQ+ founders and operators are a minority group which has been overlooked,” Asher Ismail, co-founder of revenue-based financing startup Uncapped, told CNBC via email.
“We have much further to go for the LGBTQ+ community to feel comfortable to be open and show up as their full selves at work.”
The report encouraged tech investors to openly show their support for LGBTQ+ founders, add pronouns to their email signatures, Zoom and LinkedIn profiles, and track diversity in their portfolio companies.
Diversity has historically been an issue in the tech community. The nature of venture capital, in particular, is such that it often benefits those with existing relationships and contacts, potentially putting founders from underrepresented groups at a disadvantage.
It is feared the contraction in startup funding, declining technology valuations and a worsening macroeconomic backdrop could worsen the situation for LGBTQ+ founders.
“The macroeconomic downturn and slump in startup funding have made it harder for all founders, but especially for diverse founders,” Ismail told CNBC.
“There are no clear reasons behind this but it could be due to VCs playing it safe with their existing networks or repeat founders which may not be as diverse.”