The Gaingels Letter
We are honored and excited by the opportunity to be a part of the history and journey of your company and we look forward to being value-add investors for you along the way. Thank you for the trust you placed in us by inviting us to invest in your business.
We believe that this comes with responsibilities, including transparency of our values, opinions, and operations; being ready to support your company when asked; and respecting the governance structure of your company.
Through the way we conduct the business of investing in and supporting our portfolio companies, Gaingels seeks to have a measurable impact in fostering social progress across the venture ecosystem. The delivery of this letter to each of our investees is one way in which we do so, confirming our mutual alignment to the values of diversity, inclusion, representation, and visibility, especially for people across the gender and sexuality spectrum. It is a direct way in which we invite you to stand alongside us and the rest of our portfolio and express your values openly.
We ask that you review the below and consider acknowledging its receipt by signing this letter. For the sake of clarity, this letter shall not be construed as a binding obligation to perform according to any criteria, and it is not in any way to be seen as a custom condition to our investment. Rather, it merely serves as a record of our mutual connection and alignment regarding the topics below.
1. Non-discrimination and diversity policies.
Research by McKinsey and others suggests that companies with more diverse workforces perform better financially.
- We encourage you to consider adopting a non-discrimination policy that includes LGBTQIA+ non-discrimination language, similar to those recommended on the HRC website. If one is already in place, we would appreciate if you could let us know.
- We encourage you to look at the www.parity.org website and consider taking the pledge to interview and consider at least one qualified woman and person of color for every open role, VP and higher, including the C-Suite and the Board of Directors.
We have found that we are able to have the greatest impact when we help our portfolio companies think about these issues and raise them for discussion with their most trusted advisors, investors, and boards.
- To that effect, we encourage you in your next board meeting to add to the agenda and briefly discuss the adoption of a non-discrimination resolution and the signing of the parity pledge. And if those are already in place, we applaud you and invite you to make time to discuss with your board what the impact has been on your culture, your hiring, and your financial performance. We think you might find yourself pleasantly surprised.
2. Board Composition
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.
We encourage you to meet with Brandon Parkes, our director of Board Diversity, to learn how we might be able to help you and your board build a more inclusive leadership structure. If you’re interested in learning more or pursuing the help of our Board Diversity program, please contact Brandon Parkes.
3. Corporate Responsibility and Corporate Philanthropy
In August 2020, Gaingels signed the 1% Pledge, committing one percent of our future upside to philanthropic causes in service of the LGBTQIA+ community. We encourage you to support your own community or causes in the same way.
By becoming a financial success for all your investors including us, your company can already support causes like this, indirectly. To have an even greater impact, we also proudly became a Pledge 1% Partner. Pledge 1% Partners are leading organizations committed to encouraging the early-stage companies they work with to make giving back a priority.
Along with the rest of the 1% Pledge Ecosystem, we want to help change the world by inspiring early-stage corporate philanthropy. Pledge 1% is an easy way to leverage a portion of your future success to support nonprofits in your community or philanthropic causes that are deep in the DNA of your culture and of your team.
We encourage you to take a look at the 1% Pledge website and consider joining us, and dozens of other startups and venture-backed companies in participating in the pledge, committing either your equity, time, product, profit, or any combination, depending on what works for your company.
4. Diversity Term Sheet Rider Initiative
Gaingels is proud to be a founding party to the Diversity Term Sheet Rider for Representation at the Cap Table, a powerful tool that investors and companies can adopt to bring more diversity to the recipients of the financial outcome of venture-backed companies. Along with our co-founding partners, Gaingels believes in the fundamental positive social impact of bringing diverse check writers from underrepresented communities into deals as co-investors.
This strong belief led to the creation of The Diversity Term Sheet Rider for Representation at the Cap Table, an optional commitment that entrepreneurs and investors can discuss and consider at the time when a new round is being negotiated to allocate a portion of an open round to bring in Black or other underrepresented groups, including but not limited to LatinX, female and LGBTQIA+, as co-investors on deals, thereby immediately increasing diversity at the core of the deal-making process.
The pledge is made by VC firms and issuing companies like yours to make space for diverse check writers in a future round of funding, either as a minimum percentage or a minimum amount. It’s an easy pledge that goes a long way towards equalizing the impact of your success. Please consider adopting this (or similar) language in future term sheets you will negotiate with investors:
In order to advance diversity efforts in the venture capital industry, the Company and the lead investor, [Fund Name], will make commercial best efforts to offer and make every attempt to include as a co-investor in the financing of at least one Black [or other underrepresented group including, but not limited to LatinX, women, LGBTQIA+] check writer (DCWs), and to allocate a minimum of [X]% or [X] $’s of the total round for such co-investor.
If every firm and company were to commit to making this significant change in their deal-making process, the VC playing field would be more inclusive. This will give diverse check writers (DCWs) exposure to networks they previously did not have access to, and it will benefit firms by bringing more diverse thinking to the companies in which they are investing at the investor and board level.
5. Company All-Hands, Press & Announcements
Many of our portfolio companies have announced and discussed Gaingels’ investment internally and with other investors, as this has been a catalyst for positive discussion around the topics of diversity and inclusion. It has led to folks on certain teams feeling comfortable enough to come out to leadership when they hadn’t felt reassured up to then that it was going to be ok for them to do so. It has sparked conversation and commitments. It has generated ideas for how each company could become an active participant in the larger discourses happening outside the corporate environment. Our team has enthusiastically joined in on company calls and all-hands, introducing ourselves and the story behind Gaingels and our mission. We would be delighted to help you, or your chief culture/people officer think about how Gaingels and our mission, commitment, and background can contribute as a reinforcement of your culture and values.
In the same vein, our ability to announce to the world our investment and alignment with you is also a powerful factor in the way we impact and affect the venture world for the better. Besides enthusiastically adding your logo to our portfolio page, there are two ways in which you can help us succeed in our mission.
- Press Announcement. We don’t expect you to announce the round of funding in which we participated, but if you do announce the round, issue a press release, or speak to the press about the funding, and any other investors are mentioned, we would really appreciate it if you would include Gaingels amongst the mentioned investors in this round. It helps others in the ecosystem take note of our participation and ask questions about our focus and impact. This is how we move the ball forward on our mission.
We encourage you, or your team, to reach out to Gaingels’ Managing Director and partner Lorenzo Thione to discuss all internal and external communications, and you might expect a follow-up communication in this regard in the next few days.
6. Gaingels Scholars Program
As part of our Venture Inclusion Program, Gaingels has established a Gaingels Scholarship program that seeks to foster and support deserving LGBTQIA+ youth, by providing need-based LGBTQIA+ students seeking to attend college or to continue attending college with a tuition and expenses grant. This not-for-profit program awards $5,000 grants to minority LGBTQIA+ youth to help cover tuition and living expenses while attending an accredited institution.
In 2021 we awarded 35 grants. We are seeking to double this target in 2022. But the support towards diversifying the venture ecosystem doesn’t stop at the grant for these deserving students. As part of the scholarship program, we encourage the grantees to learn about employment opportunities in the innovation-driven venture-backed economy.
We encourage you and your company to commit to interviewing at least one Gaingels Scholarship recipient referred by us to you for a full-time or summer intern position. The interview practice is essential for these students, even if a position is not immediately available.
You’re under absolutely no obligation to hire any candidate, but we invite you to help us give these students much valuable learning experience by interviewing at your company. If your team is amenable to participating in this program, please let us know, and contact Brian Lucksinger.
Thank you again for your trust in us and for your commitment to the values of diversity, equality, and inclusion, and for standing proud alongside us in seeking to create a better and more equitable business world.
Gaingels, its partners, investors and our entire community.