LGBTQ+ Founders Started Nearly 1 in 10 New Businesses in 2023

Nich Tremper

Key Findings

  • LGBTQ Founders Start Nearly 1-in-10 New Businesses: LGBTQ entrepreneurs started 8% of new businesses in 2023, up slightly from 7% in 2021.
  • Making an Impact on Their Communities Is a Top Priority: LGBTQ founders were much more likely than average to say having a positive impact on their communities was a priority for their business. Seventy percent of LGBTQ founders said it was important to make a positive impact on their communities, compared to 53% of all founders.
  • LGBTQ Entrepreneurs Are More Likely to Self-Fund Their Business: Eighty-six percent of LGBTQ entrepreneurs funded their business with personal savings or assets, compared to 76% of all entrepreneurs. LGBTQ founders were also more likely than average to need $1,000 or less in start-up funding.

Introduction

Small businesses play a vital role in their communities, providing valuable goods, services, and jobs. LGBTQ entrepreneurs are particularly focused on the relationship between their business and their communities, according to Gusto’s 2024 New Business Formation Report, which surveyed 1,300 entrepreneurs who started a new business in 2023.

LGBTQ business owners were 32% more likely than the average business owner to say it was important to them that their company make a positive impact on the communities they care about, with 70% of LGBTQ business owners listing that goal as a priority, compared to 53% of all the business owners in our survey.

LGBTQ entrepreneurs, who made up 8% of the respondents, were also more likely to fund their business with personal savings or assets and to need $1,000 or less in start-up funding. That self-reliance may reflect a desire on the part of LGBTQ entrepreneurs to start smaller, more community-oriented businesses. It may also be a response to having less access to outside funding.

LGBTQ Founders Started 8% of New Businesses in 2023

Bar chart of Share of entrepreneurs who identify as LGBTQ

Members of the LGBTQ community are represented among new business owners at the same rate they are within the U.S. population. The LGBTQ community accounts for 8% of the U.S. population, and made up 8% of the entrepreneurs who started a business in 2023. That share is similar to 2021, the most recent year for which we have comparable data, when 7% of new business owners identified as LGBTQ.

LGBTQ Founders Care About Helping Their Communities

Percentage of all entrepreneur and LGBTQ entrepreneur founders identifying what is most important for their business.

LGBTQ founders show a strong balance between pursuing independence and being attentive to the needs of their communities. New business owners who identified as LGBTQ were much more likely than the average respondent to say that having a positive impact on their communities was important to them: 70% of LGBTQ founders cited this goal as a priority, compared to 53% of all the founders in our survey.

Autonomy and financial independence were also top priorities for LGBTQ founders. Having control of their time and deciding their path in life was the most popular motivator for LGBTQ founders, with 84% citing it as a priority. Meanwhile, 76% of LGBTQ founders said it was important to them to grow a business that would allow them to support themselves and their families far into the future.

Percentage of all entrepreneur and LGBTQ entrepreneur founders identifying their reasons for starting business

The desire for personal and financial freedom also played a major role in many LGBTQ entrepreneurs’ decision to start a business. Wanting flexibility and to be their own boss was by far the most popular reason the entrepreneurs we surveyed started their business, but that was especially true for LGBTQ entrepreneurs: 77% said they wanted more flexibility and to be their own boss, compared to 66% of all entrepreneurs.

New business owners who identified as LGBTQ were also more likely to say they wanted financial stability or to build a long-term asset (46%) than all the new business owners in our survey (36%).

LGBTQ Entrepreneurs Are Self-Reliant

Bar chart of Percentage of all entrepreneur and LGBTQ entrepreneur founders identifying amount of start-up funding needed

LGBTQ business owners tend to need less start-up funding than the average business owner. In 2023, 40% of LGBTQ-owned businesses started with $1,000 or less, compared to 29% of all new businesses. Meanwhile, just 17% of LGBTQ-owned businesses started with more than $10,000, compared to 31% of all new businesses.

That disparity may come from the fact that LGBTQ founders start smaller businesses than average. In 2023, a little over a quarter (27%) of new, LGBTQ-owned businesses had no employees, compared to a fifth (20%) of all new businesses.

Bar chart of Percentage of all entrepreneur and LGBTQ entrepreneur founders identifying their financing sources.

Given that they tend to need less start-up funding, it’s no surprise that LGBTQ entrepreneurs are more likely than average to start their business with their own money. In 2023, 86% of LGBTQ entrepreneurs used personal savings or assets to start their business, compared to 76% of all entrepreneurs. Just 26% of LGBTQ entrepreneurs used external funding, while 34% of all entrepreneurs did.

But in some cases, LGBTQ founders might be self-funding their business out of necessity. A 2024 analysis of LGBTQ-owned firms by regional Federal Reserve Banks showed that LGBTQ-owned businesses were more likely to be denied full financing than non-LGBTQ owned firms, despite the fact that both groups applied for private financing at similar rates. 

Conclusion

LGBTQ business owners are an important part of the entrepreneur community. They understand the vital role businesses can play in their communities by creating new goods, services, and jobs. They also value the independence and financial security starting a business can create for them and their families.

Nich Tremper Nich Tremper is an Economist at Gusto, researching entrepreneurship and the small business life cycle in the modern economy. Nich has worked in research offices in the federal government and financial service industries, studying small business outcomes and their roles in local economies. He holds a Master’s degree from the University of Minnesota, where he researched local government business expansion efforts. Nich currently lives in Winston-Salem, NC.
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