About Our Investment Process
Information for Prospective Portfolio Companies
Gaingels is one of the largest and most active venture investment syndicates in the world, and we are singlehandedly dedicated to supporting diversity and fostering social change towards equality via profitable investment in the venture asset class.
The Gaingels syndicate and its network of partners invest in venture-backed companies in any sector and at all stages of growth - from pre-seed to pre-IPO. Gaingels does not lead rounds, and we only seek to invest as part of a group of other experienced and well established venture investor, primarily VC funds, but occasionally in rounds with meaningful investment from recognized super-angels.
As a venture syndicate that's laser focused on helping make the venture ecosystem more diverse, open, and inclusive, we seek to partner with companies that share our mission and are embracing of diverse leadership, inclusive of LGBTQ+ and gender expression.
Gaingels was originally born to specifically invest in LGBT founded and led startups, but we believe we can drive social change in a broader way in the venture ecosystem by being valuable allies in bringing more diversity at all levels of leadership for our portfolio companies, within and without. While we may seek to support diversity where it already exists in whatever form, we will also invest in any company who recognize Gaingels as a partner that can assist them in rounding out and supercharge their diversity efforts.
We do so by asking each of our portfolio companies to read, acknowledge and sign our Gaingels Letter as part of our investment process. While the letter is not designed to be a legally binding commitment on our companies, it is a way in which we overtly and explicitly discuss our principles and our values and solicit feedback, dialogue, and input on how those values may align with those of our investees, and of our co-investors.
We are proud to have some of the largest number of LGBT founded/led startups in our portfolio in venture capital, but we will also proudly invest in companies without LGBTQ+ leadership that actively value diversity, and recognize Gaingels' value as a partner in hiring diverse talent, building diverse boards, and include a broad and diverse set of investors and stakeholders in their success through cap-table diversification.
Besides a commitment to DEI in leadership and capital structure, what else does Gaingels look for in a company in order to invest?
Our members and partners evaluate prospective investment in five separate areas:
- Team's unique expertise or track record in the domain
- Potential Market Size
- Other Current and Prior Investors
- Valuation and Deal Terms
Depending on the exact details of our investment process - which may differ depending on the stage of the company, the sector, and the details of the round, such as co-investors, we may invest from a more traditional fund vehicle or through a syndication process but in all cases seek to work with the founders on a process that best suits them.
The most important element in our process, since Gaingels never leads any rounds or sets the valuation or terms for an investment, is the presence of a lead investor that can provide the validation and diligence signal for the Gaingels network to co-invest alongside with.
In our collective experience, we notice that successful investments (realized or as yet financially unrealized) typically score strongly in at least four out of five of the above areas. Conversely, those weak in more than three of the five seem to fare significantly worse. In particular, even at the seed-stage level, founders with either deep industry experience, prior exits, or experience as a senior leader at another high growth/strong culture startup tend to have greater success on the average.
We have also observed that when investments are led by one or more strong institutions it's a strong indicator of confidence and, together with some traction, seem to be key differentiators between stronger and weaker performers. It also contributes to the interest from our network to invest larger amounts and it's a primary driver of overall check-size for a Gaingels.
What stages does Gaingels invest in?
The Gaingels network of investors and syndicates invest in companies at all stages of growth, but typically when a strong venture institution is the lead investor. In addition, Gaingels seeks to continue to invest in each and every round for every one of our portfolio companies, all the way through an exit. Because we typically do not invest from a pool of committed capital, different individual investors with different profiles for stage interest and risk will be seeking to participate and thus we have the ability to continue to invest in each round where the company will make room for our community.
What's the difference between the Gaingels Syndicate and Gaingels Nexus?
While our core syndicate of investing members typically is stage agnostic and sector agnostic, many of our own individual members also run other syndicates, or have access to additional investors, who only typically invest in certain sectors, stages, or alongside a select number of lead investors. As such, we have established a number of partnership with these venture partners, and when a Gaingels investment also suits one or more of these venture partners' focus, they typically invest alongside Gaingels, and under the Gaingels brand and allocation, in our portfolio rounds. As such, while most of our investments happen through one vehicle (or SPV), when we include one of our Nexus partner, we may bring two or sometimes three entities, each representing a portion of our overall investment. This, or any other detail about the process we select to invest, has no bearing on the quality or intensity of our commitment to helping and supporting each of our portfolio companies. We love working with all of our founders and seek to make them feel supported and a part of a valuable community.
How much does Gaingels and its membership invest?
Gaingels is not a typical VC fund. Most of Gaingels' investments happen through an SPV created to aggregate investor members' commitments. Every member of the network makes an individual decision as to whether they wish to invest and how much to invest. Therefore, every investment is different.
Our earliest stage investments are made through an annual rolling fund for early stage investments that our members participate in, called Gaingels Spark. Later stage investments from our network range in size depending on the stage of the company, the terms, traction and the set of co-investors. The sweet spot for our larger investments are Series B and later with top VC leads and coinvestors . Regardless of size, all investments coming from multiple investors are pooled into a single purpose LLC (SPV) and this is what appears on your cap table as a single entity bearing the Gaingels name.
How does Gaingels help its portfolio companies?
As a condition of membership, all our members are required to assist our portfolio companies with their expertise, connections, network, advice and introductions. In addition, a large part of Gaingels's operating budget is dedicated to provide support and services to our portfolio companies in furtherance of our underlying mission. As a combination of our network and our staff's resources and expertise, this falls in the following categories:
Business Development Introductions: Whenever a company asks, we'll run though our internal database of connections, as well as through our entire membership list to discuss potential introductions. We're constantly asking our members to make specific introductions. In addition, our portfolio is large and diverse both in terms of sector and stage of growth, and we are always happy to make cross portfolio introductions (double opt-in).
Talent Recruitment: We're constantly helping our portfolio companies recruit team members, and access a diverse pool of talent that they may not have access to. We do this both directly, through our Gaingels Job Portal, as well as indirectly, through the offers and partnership provided by some of our recruitment partners, of which several are Gaingels portfolio companies. Such partners include Mathison.io, Canvas, Hallo, Valence, The Sourcery, and Diversio. With over 11,000+ job opportunities at our 700+ Portfolio companies, the Gaingels' Job Board is now the most comprehensive list of jobs in the innovation economy at companies that embrace diverse leadership.
Board Recruitment: In the two years, Gaingels has assisted more than 50 of our portfolio companies in defining business and diversity goals for their boards and finding qualified Board and Adviser candidates, through the Corporate Board Diversity Program. The program works with more than two dozen organizations (and growing!) that maintain large databases of experienced and vetted board-ready candidates from rising VP level through CEO. Candidates include women, LGBTQIA+, Black, Latinx, Asian, and Pacific Islander candidates from a broad range of industries across unicorn startups to Fortune 500 companies. The Board Diversity Program is a free service to the portfolio companies of Gaingels.
Follow-on Investment: Gaingels seeks to invest in each subsequent round for our portfolio companies. Because we do not lead rounds we will actively work with our portfolio companies to help them identify potential and suitable lead investors and make the appropriate connections where helpful.
Founder Offers, Discounts and Partnership: A number of Gaingels portfolio companies offer special benefits and deal terms to other companies in the portfolio. Those offers, as well as many other offers across the venture innovation space, and specifically geared for Gaingels founders, are accessible to all portfolio companies here
What is the "Gaingels Letter?"
We ask the companies with which we invest to sign a document we call the Gaingels Letter and to comment on its contents before we close any investment. In essence, the letter asks you to affirm your company's commitment to diversity, non-discrimination and inclusion at both the general staff and board levels.
What if Gaingels chooses not to invest?
Like any venture investor, Gaingels only commits to and completes an investment in only a portion of the opportunities it sees and evaluates. Anything from investment bandwidth, stage fit, as well as the details of a given round may lead us to decline to invest or to present the investment to our members. And even when we do, because member investors act in independent capacity, we may fail to obtain the minimum amount of investment interest that is required by the company to participate. Because of all this, and because things are constantly evolving, a "no" generally means "not now" as opposed to "not ever".
We are generally happy to help every company we meet, regardless of whether we invest or not, be it with introductions or candid feedback, so don't be afraid to ask if there is a specific way you think the Gaingels network can help you.