StartOut and Socos Labs have launched the StartOut Pride Economic Impact Index™ (SPEII) to quantify the economic value of under-utilized LGBTQ+ entrepreneurs in near real-time, an industry first. Funded by JPMorgan Chase as part of its $150 million Small Business Forward philanthropic initiative to invest in underserved entrepreneurs, this project is further supported by Ogilvy, Google, Crunchbase, Reaching Out, and the Movement Advancement Project.
The goal of the SPEII is to quantify the unrealized potential of "out" high-growth LGBTQ+ entrepreneurs, for the benefit of the US economy at large. While integration of underserved entrepreneurs, including the LGBTQ+ community, may have progressed over the last decades, but their access to critical resources is still far from equal. This is due in part to the lack of reliable data on the contributions of LGBTQ+ entrepreneurs who create jobs, raise capital, and innovate, and the impact they could have had with equal access. The SPEII fills that gap at a time when the US needs all talent available to kickstart the economy following the COVID-19 pandemic.
The initiative shows that over the last 20 years, for example:
• More inclusive access to resources would have created over 2 million jobs in the U.S.
• Over two of every three US metro areas with at least 50 high-growth entrepreneurs did not show a single one who identifies as LGBTQ+, which presents major growth opportunities for these metro areas.
• Only about one in ten high-growth LGBTQ+ entrepreneurs who would have been expected to close $1M+ in funding actually raised it, illustrating a major opportunity for investors.
• Metro comparisons reveal big discrepancies in leveraging the economic potential of high-growth LGBTQ+ entrepreneurs. While San Francisco benefited from over 15,000 jobs, the numbers in Boston and Chicago were a tiny fraction of that.
• LGBTQ+ entrepreneurs raised $5 billion in funding. San Francisco, a traditional hub for both entrepreneurship and LGBTQ+ culture, accounted for $3.9 billion of that funding. Funding LGBTQ+ entrepreneurs in the rest of the country is thus a major growth and investment opportunity.
Municipalities, investors, ecosystem builders, and grantors can use the new SPEII to improve environments for founders of diverse backgrounds and reap the corresponding benefits. This product can help decisions based on economic impact and comprehensive quantitative data. Free for anyone to view and dynamically updated at least monthly, the product considers data on a total of five million U.S. entrepreneurs, identifies the approximately 86,000 high-growth entrepreneurs among them who typically raised $1M or more in funding, and compares actual and potential economic output of "out" LGBTQ+ entrepreneurs with their peers. The platform offers views and comparisons by metropolitan area.
"The launch of the SPEII, two years in the making, could not be more timely. Each entrepreneur who has what it takes to drive the recovery of the US economy must get a fair chance to contribute," added Andres Wydler, StartOut's executive director. "We are immensely proud to offer, with our partners, an actionable tool for decision makers nationwide who recognize the need to include and leverage all entrepreneurial talent that is able and willing to rise to the occasion."
An industry first, the initiative utilizes big data analysis and a corresponding AI-driven engine to both measure contributions in close to real time, and calculate what they could be with equal access, thus quantifying the unused potential for job creation and innovation by LGBTQ+ entrepreneurs. The easy-to-use platform visualizes growth opportunities by metro areas in terms of jobs, patents, fundraising and company exits.
Dr. Vivienne Ming, founder of Socos Labs, said: "Our big-data driven, close to real-time approach takes the guesswork out of decision making for interventions. Over time, we can evaluate trends and differences with the data at hand and will gain deep insights into which programs and regulations impact opportunities for underrepresented communities, positively and negatively."
Ted Archer, head of Small Business Forward at JPMorgan Chase, added: "Now more than ever, it is critical to create an environment free of marginalization where all have a chance to share in the economic opportunity that business ownership can provide. SPEII and its near real-time data will enable decision-makers to make data-driven investments that support the broader entrepreneurial ecosystem as we recover and rebuild from the COVID-19 crisis. We are proud to support StartOut in this groundbreaking endeavor that helps put into focus the contributions of the LGBTQ+ community."
As Diversity & Inclusion is increasingly recognized as a driver for innovation, business success and ultimately shareholder returns, the SPEII allows business leaders and investors to increase impact by integrating LGBTQ+ talent across industries, nationwide.
