Dear Colleagues,
This week we are profiling and interviewing Gaingels, one of the largest venture syndicate in the world and the only one that is focused on bringing diversity in the VC ecosystem. Gaingels has a network of with 2700 members, and has made 2000+ core investments, with 100+ exits and $600M raised to date.
Upside VC profile of the month:
VC name: Gaingels
Headquartered: Burlington, Vermont (USA)
Founded: 2015
Managing Partners: David Beatty, Paul Grossinger, Lorenzo Thione, Peter Steinberg, Jake Prigoff, Max Frenkel
Website: https://gaingels.com/
Sectors: All
VC type: Venture Capital Sydicate
Typical investment range: $25k-$2.5M
Total number of investments: 2000+ core investments to date
Total number of exits: 100+
Gaingels is a leading venture investment syndicate in support of and representing the LGBTQIA+ community and allies in the venture capital space. Gaingels also supports its companies with a diverse talent and capital pipeline and provides an internal diverse board member recruitment advisory to help bring more diversity and representation within private boards.
Gaingels invests in companies with diverse/LGBTQIA+ founders and C-suite leaders at all stages of growth, as well as in other high-growth companies resolved on building more inclusive teams. Gaingels is an ardent supporter the Diversity Term Sheet Rider Initiative to increase access to venture funding events for non-traditional check writers, and regularly co-invests with select VC leads across a variety of sectors, from technology, to B2B, healthcare and consumer, in competitive and over-subscribed rounds from Seed to Growth/pre-IPO.
Here is a table summarizing some of Gaingels’ portfolio startups including 70+ startup unicorns, and sports tech startups such as Oura, Uplift Labs, Eight Sleep, Dapper Labs, just to name a few.
Picture: Select Gaingels’ portfolio startups
Gaingels has raised $600M in funding since 2019 and built a network of 2700 members comprised of CEOs, founders and investors.
For more information visit www.gaingels.com.
As part of that we interviewed Lorenzo Thione, Managing Director at Gaingels.
📝Show Notes: Through this interview, we touched on Lorenzo’s background and his role at Gaingels, what Gaingels is. We also touched on his investment philosophy, the types of startups he invests in, and so on.
🚀Best Quotes: Here’s some of the key discussion points and best quotes from our conversation with Lorenzo:
On his background as an entrepreneur:
“ I would say my background is pretty rooted in technology. I studied computer engineering, computer science, and from there I became a research scientist at Xerox Park and I launched a startup in 2003. I was the technical co-founder, and it was probably one of the earliest AI companies applied to the problem of web search, which is incredibly topical and relevant today”.
“The company was called Powerset at the time, and in a sign of times to come or things to come, we were acquired by Microsoft. I was very much looking at the same vision and idea that motivated them to now their partnership with OpenAI and obviously, 15, 16 years ago, it was a different technology, with much less computational power. A lot of breakthrough had not happened yet”.
“So it's actually cool to see how much of that vision is being realized now, and it's nice to be a part of that change from the investment side. I started investing right as part of that acquisition and started multiple other startups, a couple of which failed as one would expect”.
On how he ended up launching Gaingels:
“And one of the first things I did was I started a nonprofit called Start Out that supports LGBTQ entrepreneurs and founders in the ecosystem back in 2008. It's still vibrant and has grown to a 40,000 strong community of entrepreneurs and constituents all around the country, and it's the largest nonprofit that supports the LGBTQ entrepreneurial community”.
And from that came the work of Gaingels, which was born originally as an angel group that was really focused on the LGBTQ community, but has evolved into, as you said, as one of the largest most active venture syndicates in the world, and the only venture investor that is single-handedly focused on bringing more visibility, representation, and diversity in the venture capital ecosystem at all levels of leadership, decision making, and of value creation, starting from the founders by going into staff, the governance, and even the cap table. All of these are places where more participation and more visibility and more representation ultimately brings about social”.
On how Gaingels focuses on bringing diversity into the VC and startup world:
“So what we have effectively done is we've built a network of investors, individuals, family offices, small funds that are incredibly diverse and represent the LGBTQ community, the disabled community, the people of people of colors, of various backgrounds and women, that traditionally have been left out from the venture capital ecosystem”.
“And we've given them the ability to partner with venture capital firms in the deals that they are investing in. And so what we've done is we built relationship with these firms and by virtue of basically telling them, Hey, we'll help diversify the cap table of your portfolio companies, and we will also help your portfolio companies with the direct connections and hiring opportunities and talent pool that comes from this large and growing community, and all of the relationships that we, and they have built over time”.
“And that in turn goes into bringing more capital and more services to the portfolio companies we invest in. For example, we're the only investor out there that strategically and systemically helps our portfolio companies with sourcing and bringing on board board of director candidates, so directors on their boards that come from underrepresented backgrounds, and we have the strongest success and track record than any institutions in terms of being able to bring those diverse investors on the board of our portfolio companies. And we're very proud of that track record”.
On the size of investments ($25k-$2.5M) that they make into startups:
“We have a very early stage set of funding opportunities with small checks of $25,000- $50,000, all the way to investing hundreds of thousands or millions of dollars into larger growth round of companies that become part of the Gaingels community”.
“One of the things that we require though, which is a little bit of a counterintuitive sort of element, is that we require those companies to be already venture backed. We are not the first checks that can go in, and part of the reason for this is that we invest in dozens, if not hundreds of companies every month, which is an incredibly high volume of investment. We have a portfolio that is closing in on 2000 portfolio companies”.
On the lack of diversity among founders and VC based startups:
“If you basically take the fact that underrepresented categories are disproportionately more likely to have a need or a desire to be entrepreneurs. Because they often find discrimination in the employment world, or they need to find ways to basically break out of a traditional employer employee relationship”.
“And then you pair that with the fact that when you look at venture funding itself, where dollars go the vast majority of those dollars go to companies with either exclusively male founders or at least one male white founder in them”.
“And then when you start to look at companies with intersectional founders like trans women of color or women, you get a proportion of the dollars that is absolutely disproportionately lower than the percentage that they make up of the overall founder population right”.
“And there isn't any reasons for that to happen other than systemic lack of access. It doesn't even have to be bias or discrimination, or sort of a misogyny or homophobia. All it needs to be is existing networks that are impermeable, from outside and money that recirculates to the same networks because, hey, you've worked with that person, you've went to that school, I've invested in your company before. And if the money and the support only recirculates in the same social network there, there is no opportunity for anybody else to break in”.
On their goal to help founders from diverse background get their startups founded:
“And part of the work that we're doing is to try and break apart those social networks and expanding them so that there can be more check writers of color, more women that are writing checks more LGBTQ, disabled and more diverse people that are participating in this engine of innovation and of wealth”.
On his investment philosophy:
“So there's two sides of that. There is my own personal investment kind of strategy or philosophy. And I can tell you that from my own point of view where I think I can add the most value, where I think I can understand the strength of a product or of an approach or of a technology the best, that's where I invest”.
“And so I tend to invest at the early stages. So anywhere from Pre to series A. I don't particularly have some diversification, but like generally speaking, where I can make a difference is when I have a relationship with the founder is still trying to get product market fit and sort of those early stages and then the sectors in which I both find my kind of help the most fitting, but also where I want to see the most innovation happen”.
On his focus on startups that can have a social impact:
“And therefore there's some social impact aspect to the investment work I do. It is ultimately in the decarbonization of the supply chain broadly. And so we're talking about AgTech innovation, food tech, innovation, alternative proteins, bio fermentation meat, self cultured meat and so on. Decarbonization of the supply chain with reverse logistics, electrification of the transport and freight system, battery energy storage, energy production, and so on”.
On his focus on health and wellness, wearables, and AI startups:
“ I also focus on health and wellness, especially where it comes from health and wellness optimization”. And so diagnostic wearables and AI applied to the quantified self and individual health and optimization and extending all the way to longevity research and longevity support. And so life health span expansion, and then some work in the gaming platform, media space, although pretty limited”.
“The rest of my investments are all in AI and that, as I was telling you, it's really stemming from my background and my long rooted belonging to this community and understanding both where we were 20 years ago and what are the potential and opportunities for these technologies to disrupt the creative industry, the financial industry, pretty much every industry is going to be disrupted in one way or another by the evolution and the innovations that are happening in AI”.
On what he is looking for when investing in startups:
“We look at a really excellent team. And so we definitely pay attention to who the team is, who are the founders are where, why do we believe, why should we and the other investors believe that they are uniquely well positioned to solve the problem that they're setting out to solve?”.
“We're looking for a large venture scale market in which of course has changed the meaning of, which has changed over time, but right now it is really something that can at a minimum generate a hundred million to a billion dollar in revenue per year or more and can like expand from there with a large addressable market in the multi-billion dollars worldwide”.
“We are looking for reasonable terms, especially in times that fluctuate as they have been macroscopically. We look to to pay the right market price for the investments that we make. We look for cultures that are aligned with our mission, right? Yeah. And we ask all of our portfolio companies to sign the Gain Angels letter pledge, which is a non-binding kind of a statement that they make around why it matters for them to work with gain angels to help them diversify their talent and their governance and their leadership and their cap table, and there are various ways in which they can do so”.
“And then we look to who the other investors are. And we make sure that the lead investors and the past investors, both are good investors with a track record and knowledge of the space and, and of the asset class, but also that they have renewed conviction, right? We don't want to see past investors that are not continuing to support their companies”.
“We're looking for strong external new signal of investors that are basically making brand new bets as opposed to showing up, past investments and making sure that they don't go to zero. So that has a place, obviously, especially once you are an existing investor, you want to continue to support those companies”.
“But we really look a lot to what the signal in the market is, as to the strength of a given company, vis-a-vis another one for the investments that we make from funds, which we have a few. We do our own, uh, independent analysis and diligence. And that is a combination of sort of the risks in the market, the competitive analysis, the comparable ANA analysis around exit opportunities, and where that fits into the portfolio construction of each fund product that we may be working with”.
On the fact that they look at 300 potential investment per month and end up investing in 30-50 deals per month:
“Gaingels is probably looking at 300 potential investment per month, and typically we will surface or invest in somewhere between 30 and 50 of those. And again, you have to take this also with the fact that of those 300 there will be a section of them that just don't qualify and we won't even just look at them.”
“And then the other ones are more about the elements that we were just talking about and who the investors are and you know, what the terms are and and so on. But a lot of them already come with all of the ones that we look at come with the lead investor and an investor in perimeter, which means that they've already made it through several layers of screening that has gone from the tens of thousands down to the few dozens”.
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⭐Upside VC profile: Gaingels & Chat with Lorenzo Thione, Managing Director