A new study from payroll and human resources platform Gusto reveals some interesting trends around LGBTQ+ entrepreneurship, most notably that queer small business owners tend to be more interested in giving back to their communities than their straight counterparts.
Last week, Gusto released its 2024 New Business Formation Report, based on surveys of 1,300 entrepreneurs who started their businesses in 2023. As part of the report, the company’s economists looked specifically at responses from LGBTQ+ business owners to identify key trends. They found that eight percent of entrepreneurs who started a business last year identify as members of the LGBTQ+ community — roughly the same percentage of the U.S. population that identifies as LGBTQ+, according to the most recent polling data from Gallup.
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That number is also up slightly from 2021, when only seven percent of new business owners surveyed by Gusto identified as members of the LGBTQ+ community.
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Gusto’s survey also asked new business owners about their values and reasons for starting their companies. “LGBTQ founders show a strong balance between pursuing independence and being attentive to the needs of their communities,” according to the report.
In fact, 70 percent of LGBTQ+ entrepreneurs surveyed said that having “a positive impact in communities that are important to me” was a priority, compared to just 53 percent of all respondents. Seventy-six percent of LGBTQ+ entrepreneurs said that growing a business that allows them to support themselves and their families was important, and 84 percent cited a desire to control their own time and activities.
As Nick Tremper, a senior economist at Gusto, told PinkNews, LGBTQ+ people’s history creating community based on their shared experience of discrimination is likely driving their investment in those communities.
“No matter where folks come from, queer people have had to create a community,” Tremper said. “That really creates a sense of ownership and wanting to support that community.”
The study also found that LGBTQ+ business owners tend to be more self-reliant than average. According to Gusto, in 2023, 40 percent of LGBTQ+ entrepreneurs started their businesses with $1,000 or less, compared to 29 percent of all respondents. LGBTQ+ people were also more likely to self-fund their own start-ups, with 86 percent reporting they used personal savings or assets to start their business.
“That self-reliance may reflect a desire on the part of LGBTQ entrepreneurs to start smaller, more community-oriented businesses,” according to the study. “It may also be a response to having less access to outside funding.”
The Gusto study cited a 2023 analysis of LGBTQ+-owned businesses by regional Federal Reserve Banks, which found that LGBTQ+-owned businesses were more likely than non-LGBTQ+-owned businesses to be denied funding from outside sources. Tremper said that just the fear of discrimination can make LGBTQ+ entrepreneurs less likely to seek funding from banks and investors. That fear can also make it difficult to build personal relationships with potential investors, which Tremper said can be key to securing outside funding.
Despite those challenges, Tremper said the study’s findings on the prevalence of LGBTQ+ entrepreneurship is cause for optimism.
“I think entrepreneurship is an optimistic act, one [where] somebody is taking a bet on themselves,” he said. “What our survey shows is that LGBTQ+ owners are taking their place in that community and bringing their ideas to market in a way that is really exciting.”
