As the saying goes, at the end of every rainbow should be a pot of gold. And one is likely to encounter a unicorn grazing nearby, according to legend.
The LGBTQ community has long embraced such mythological symbols. The rainbow is now closely identified with LGBTQ pride, while some have taken to using unicorn as a catchall phrase to refer to LGBTQ people.
Thus, it made perfect sense to Ben Stokes and his investment partners to name their venture capital firm Chasing Rainbows and incorporate a unicorn into the logo. Their aim is to funnel capital to LGBTQ-led startups, while also encouraging more LGBTQ people to invest in such companies.
"The naming is a way to represent the LGBTQ community," explained Stokes, adding that, "if I go chase the rainbows, I will find the unicorns."
Plus, in venture capital circles, the term unicorn is used to refer to privately held companies valued at $1 billion. Like their namesake creatures, such firms are seen as hard to discover, with about 1,200 recognized as of last October.
Stokes, speaking to the Bay Area Reporter via videoconference from Australia last month, launched Chasing Rainbows in the fall of 2021 after being an angel investor the previous five years. During that time, in talking to various LGBTQ founders of companies he considered investing with, Stokes heard over and over how hard it was for them to find people willing to finance their ambitions.
For most people behind startup companies, they can turn to a wide circle of family members and friends when seeking initial investors. But for LGBTQ company founders, that may not be the case, noted Stokes, who is on the board of and serves as a mentor to other LGBTQ entrepreneurs via the nonprofit StartOut.
"I heard a similar track from a lot of them. When they came out, they lost friends and family due to bigotry," said Stokes, 37, who is gay. "When your first round of funding is usually from friends and family, where else are you supposed to go? We founded Chasing Rainbows so they do have a place to find capital."
It now has a $10 million fund from which it can make investments in companies who have LGBTQ people among either their founders or leadership team. Stokes said his goal over the next 18 months is to do a second fund totaling between $100 million and $250 million.
"It has been great," said Stokes, who attended UC Berkeley's Venture Capital Program.
He acknowledged, though, that the threshold to become an investor with his fund is out of reach for many LGBTQ people. Under U.S. rules to be an accredited investor, couples must earn more than $300,000, explained Stokes, while individuals must make more than $200,000.
"What we have seen, so far, is all the people who have invested in our fund to date are allies. They aren't part of LGBTQ-plus community," said Stokes. "I've found that the most interesting."
His efforts have gotten him notice within the venture capital sphere. This month Venture Capital Journal named him one of its 40 under 40 rising stars for 2023, while Business Equality magazine named him to its Class of 2023 BEQ Pride LGBTQ Leader Under 40 list.
"Ben's mission is to help create a world built on radical inclusivity, where diversity of knowledge and experience is celebrated," noted BEQ in its write up about him.
Stokes is Sri Lankan and was abandoned by his birth mother at a hospital when he was a baby. A white couple from Tasmania adopted him a few months shy of his second birthday from an orphanage.
Several years ago he addressed the United Nations about his experience as an adopted child. He also went back to Sri Lanka and helped rebuild and expand the orphanage from having just six baby cribs to 18.
"One day I was there, two babies arrived and they had only room for one, so the other baby was not taken in," recalled Stokes. "It made me think back to the day I arrived and what if I was that baby that was turned away?"
He later would graduate from the University of Tasmania to go on to earn a Master's of Tropical Medicine and Public Health from James Cook University and a Bachelor of Law from Southern Cross University. Stokes has advised the Australian Trade and Investment Commission and mentored Australian company founders through the Australian Landing Pad in San Francisco.
He has worked at both Oracle and Salesforce, and had served as the head of crowdfunding for Gay Games 11 Hong Kong 2022. He also has personal experience with launching a tech company as the founder of SocialTable.co, which aimed to create community for people around the world via gatherings at restaurants. The COVID pandemic threw a wrench into its business model.
The global health crisis also led Stokes to leave the Bay Area and return to Australia. He spoke to the B.A.R. via videoconference from a suburb of Brisbane on the country's Sunshine Coast.
"I got stuck in Australia," said Stokes, who lived near the Castro LGBTQ district. "I got the last flight out of San Francisco. I thought it would be over in a few months."
Since last year Stokes has been part of the second cohort of fellows at the San Francisco-based Material Change Institute. The program aims to bring more underrepresented people into the investment industry and introduces participants to venture capital funders via mentorships and other experiences.
"Ben is incredible," said Eve Blossom, a straight ally who is a serial entrepreneur and investor who founded the nonprofit. "He just represents such an amazing change in the industry. All minorities and women have long been underrepresented in the asset management industry, so it is exciting to watch people like Ben."
Blossom noted that of all assets managed globally, only around 1.4% is managed by women or minorities.
"That's it. It has not changed significantly over the last decade," she said.
It is why Blossom created the 15-month-long fellowship program to work with Stokes and others from marginalized communities in countries around the world who are trying to make a mark in the venture capital field. Applications are now being accepted for the third fellowship class, with the deadline to apply in April.
"The industry as a whole has not been so diverse. We are focused on changing that," said Blossom, who joined the video interview with Stokes.
To learn more about Chasing Rainbows, visit its website.
For more information on how to apply to be a Material Change Institute fellow, visit its website.
Got a tip on LGBTQ business news? Call Matthew S. Bajko at (415) 829-8836 or e-mail [email protected]
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