What does Gaingels look for in a company you invite to meet your membership?

Gaingels is sector agnostic; our members invest in the best private companies with LGBT leadership.

Wait. What do you mean by "LGBT Leadership?"

Gaingels members always seek to find companies with LGBT representation at the highest levels. This can be a founder, a C-level employee, a board member or even a major equity holder. We do this because we think it’s both important to drive social change through profitable investment as well as support members of our LGBT community.    

Other than LGBT leadership, what else does Gaingels look for in a company?

Beyond LGBT leadership, when evaluating potential investments Gaingels focuses on five factors, in the following order of importance: 

1.      Founder(s) experience
2.     Market size
3.     Investor leadership
4.     Traction, and
5.     Deal terms.

In our collective experience, we notice that successful investments (realized or as yet financially unrealized) typically have performed strongly in at least four out of five of these areas. Conversely, those weak in more than three of the five seem to fail far more often. 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.

Second, companies targeting markets with a total addressable size greater than $1BB usually have greater than average financial success.

Third, we observe 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.

Within the above criteria, those who select companies to present to our membership give priority to opportunities where a Gaingels member has already invested or committed to invest, existing portfolio companies raising new rounds, and companies introduced to us by Gaingels members or other people we know and trust. 

What stages do Gaingels members invest in?

Gaingels members generally invest in companies with a strong institutional lead investor at the late Seed through Pre IPO stage. 

How do companies present to the Gaingels membership?

Some companies present at 1 of the 18 investor meetings we hold each year: six each in Manhattan, San Francisco and Los Angeles. For other companies, typically ones which have a fundraising schedule that falls "off-cycle” in relation to our meetings, we make use of email and video conferencing to educate our members.

What’s after the presentation?

After you present your company to our members — whether in person, by video, or in email — we typically go through the following steps:

  • Distribution of a memo summarizing our members’ findings and thoughts as well as any information you provide on your company

  • A Q&A Call for members with your CEO and/or other management

  • Collection of financial interest from our members

  • Sign and close the investment

  • Ongoing support of the company.  

In the rare event there's less than $150,000 of member interest after your presentation, we introduce interested members directly to your company to explore direct investment. 

How much does Gaingels and its membership invest?

Gaingels is a member network and not a VC fund. Every member of the network makes an individual decision as to whether they wish to invest as well as how much to invest. Therefore, every investment is different.

While our collective investments have been as small as $100,000 and as large as $1 million, investments typically range from $200,000 to $500,000. Regardless of size, all investment dollars are pooled into a single purpose LLC (SPV) and this SPV appears on your cap table as a single entity.    

Does Gaingels lead investments?

Gaingels generally does not lead deals or set or negotiate terms. We feel that the institutional investors that lead your rounds are better suited and staffed to lead.   

How does Gaingels help its portfolio companies?

As a condition of membership our members are required to assist our portfolio companies. We've noticed this help most commonly manifests itself in the following ways:

  • Business Development Introductions: Whenever a company asks, we'll run though our entire membership list to discuss potential introductions. We're constantly asking our members to make specific introductions.

  • Recruitment: We're constantly helping our membership recruit team members, and as founders of Mathison.io, we have access to large database of diverse talent.

  • Board Recruitment: Gaingels has partnered with the Quorum Project of Out Leadership to help portfolio companies that have raised at least $2MM in venture funding to find qualified diverse board members.

  • Follow-on Investment: Barring business execution that’s gone wildly off-plan, we always advise our members of follow-on investment opportunities.

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 our 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.  

Does Gaingels accept applications for funding?

We regrettably do not accept applications for funding. Of all the investments we've made to date, every single one has been made as a result of a warm introduction to us by members or our network. If you explore your social network you’ll likely find a Gaingels member to whom you can reach out.

What if Gaingels chooses not to invest?

Like almost all venture investment organizations, Gaingels members choose to invest in only a portion of the presented opportunities. Because things are constantly evolving, a “no" generally means “not now” as opposed to “not ever”.  

Our members are generally happy to help every company we meet, regardless of investment, be it with introductions or “radically candid” feedback, so don’t be afraid to ask if there is a specific way you think the Gaingels network can help you.