The Queer Impact Investment Universe – Dreilinden


Violence and discrimination on the basis of sexual orientation, identity and expression remain rampant in large parts of the world¹. As a result, a disproportionate percentage of the queer community members drop out of school, stay in (or re-enter) the closet in the workplace, face bullying and in general feel disenfranchised. The resulting economic loss has been documented in a number of studies (see here and here), with economies missing out on billions of dollars each year, not to mention the impact on human livelihoods and on the well-being of queer communities and their families.

Studies confirm that Sexual Orientation, Gender Identity and Expression, and Sex Characteristics (“SOGIESC”) diversity and inclusion have a direct positive effect on the economic development of a country. More and more companies realise that diversity and inclusion are good for business. Many multinationals and SMEs have been strong allies of queer communities for some time — even if living up to their own policies has been a challenge at times. It is also encouraging to see that companies from the Global South and East are jumping on board, even though the jurisdictions they operate in may not be queer inclusive.²

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From Dreilinden’s work supporting the cause of SOGIESC inclusion in the Global South and East, we know that these positive developments do not yet reflect the situation of many queer community members in these parts of the world. We have also repeatedly heard anecdotal evidence that queer entrepreneurs as well as companies that focus on queer communities are struggling with visibility, support and financing. They not only lack the necessary networks, but the businesses are either too large to qualify for start-up support programmes and micro loans (at manageable interest rates) or too small to receive financing from traditional banks or institutional investors. There seems to be a “missing middle” that needs to be addressed.

As a result, the following hypothesis began to emerge within Dreilinden:

Queer businesses as well as enterprises focusing on queer communities are struggling to finance their transition from a micro to a medium-sized enterprise. There is strong demand for impact capital that would bridge the gap and empower queer communities in the Global South and East.

In order to gather additional data points and to make an initial assessment, Dreilinden commissioned iGravity and FMELGBT to explore this hypothesis in four countries: Mexico, Poland, Slovakia and South Africa.³ This article is the first in a series sharing findings from these studies. It addresses the scope and size of the queer impact investment universe, while also discussing some of the enabling factors behind effective queer impact investing.

Given the nascency of the queer impact investment space, there is little reference material on how to best scope the investment universe of the Global South and East. We looked at related fields and borrowed liberally from the (binary) gender lens investing world to define three pillars for queer inclusion that frame the investable universe: (1) workplace equity, (2) access to capital, and (3) products and services.

We also felt it was paramount to take into account the complexities faced by queer communities in the Global South and East. These include, for example:

  • Right to exist questioned/negated: The right to exist, including living a life of inclusion and equal opportunity, is questioned and in some cases negated in many countries of the Global South and East.
  • SOGIESC-based violence: Violence against queer communities remains one of the most acute issues across the globe. While consistent data across geographies is hard to come by, the numbers reported are shocking. What’s even more disturbing is the expectation that they are hugely under-reported due to secondary violence, refusal to investigate and lack of legal protection.
  • Criminalisation: Sexual activities between consenting same-sex partners remain illegal in significant parts of the regions examined, leading to blackmail, social stigma, discrimination and exclusion. In cases where legal protection is granted, social acceptance of the queer communities is lagging.
  • Discrimination: Many members of the queer communities lack access to basic services, such as affordable housing, preventative health care, education, financial services, or fair employment opportunities.
  • Lack of role models: The queer communities in the upper echelons are by and large invisible with limited to no “out” role models in leadership, management or board positions.
  • No diversity in the workplace: The vast majority of employees (including the queer workforce) work in environments with no diversity, equity and inclusion policies or may work in the informal sector or be unemployed.
  • Reduced access to funding: Queer-led enterprises are in many cases unable to tap into family and friends for start-up capital. On top of facing similar challenges in accessing investment and technical assistance as their non-queer counterparts, they have significantly reduced opportunity to provide collateral for more traditional financing.
  • Missing middle: Lending from microfinance institutions is geared towards retail and micro enterprises. It is often too small for enterprises, and interest rates are often prohibitively high. Traditional financing from banks or investors, on the other hand, is often too large-scale.

The three pillars, combined with the intricacies of queer communities in the Global South and East, resulted in a more holistic approach to scoping the investment universe.

The Three Pillars to Scoping the Queer Investment Universe

For our initial assessment, we wanted to look at three completely different geographies with the aim of preparing one case study each for Latin America, sub-Saharan Africa and Eastern Europe. Based on a preliminary field study by Justus Eisfeld, feedback from our network as well as our internal views, we selected Mexico, Slovakia⁴ and South Africa for this initial assessment. To pave the way for broader roll-out in the future, we also developed a methodology for country selection which we will present in one of the future articles in our queer impact investment series.

Having chosen the geographies and countries, we set out to assess the actual market size. Again, we based our approach on the three pillars of workplace equity, access to capital, and products and services. We divided each of the pillars into (probably not yet exhaustive) representative categories in the hope of using existing data to size the queer investment universe.

The Three Pillars to Sizing the Queer Investment Universe

We soon came to realise (rather unsurprisingly) that sizing the investment universe is a huge challenge, especially given the lack of consistent data. Statistics on the overall population and even more so on the queer communities are at best patchy in the chosen geographies. Data on the number and/or performance of micro, small, and medium enterprises (MSMEs) is equally inconsistent and varies greatly across different sources (see Case Study: South Africa).

Given the sensitivities specific to the queer communities, we take the view that the investment universe will grow if social acceptance as well as legal protection for queer people increases.

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