Investing is about more than pure profits, spreadsheets and returns. It certainly encompasses that but it is about far more: creating impact, nurturing success, growing community.
Affinity investing seeks to blend those goals together: utilizing the combination of investment, strategic aid and business development to break down barriers create and grow valuable communities of successful companies with beneficial impact on the world. One can define affinity investing as investing around a theme, cause, group that brings people together. It is, therefore, an opportunity for the LGBT community to be strong through creating wealth and opportunity that benefits individuals as well as the whole.
Impact affinity investing builds a value-chain: create relationships to unlock opportunities, which in turn creates positive growth, and unlocks wealth to produce more successful impact going forward, ad infinitum.
Creating relationships is the lynchpin of affinity investing, and at the core of how to utilize networks, pre-existing connections and natural synergies between people to produce genuine relationships. At Gaingels, the LGBT syndicate in which we are both members, this is why we focus first and foremost on building relationships between members: investment comes naturally after trust is built between those jointly investing in their peers. To focus merely on the transactional — the investment, the exit — is to miss the core of valuable relationship creation that in turn provides the mutual support for members and the syndicate’s portfolio companies. The relationships create the bonds, and the bonds make members willing to go that extra mile to help both each other and the backed founders succeed.
“I am passionate about supporting community, and one community I am a part of is the LGBTQ. When I align my passion with my skills and resources, it simplifies the “work” of investing to feeling as if I’m driving down 5th Ave and catching only green lights,” said Tiffany Roesler, founder of IsPossible in Tech and member of Gaingels and Lesbians Who Tech.
Relationships are also the key to unlocking opportunities. Transactional opportunities are shared all the time but the best — both from the intrinsic and financial returns perspectives — often come from long-standing relationships. Affinity’s focus on deeper relationships between peers encourages members to open their own best, relevant opportunities to members, which in turn provides the syndicate’s collective support to those opportunities, lending them a much greater chance of success.
Arthur Woods, founder of Imperative said:
At Imperative, while we are set out to humanize the workplace so that purpose-oriented people thrive, we see our investors as more than just check-writers — they are family. By reaching affinity networks in our most recent investment round it enabled us to team up with values-aligned individuals who were coming to the table not just to see significant financial returns, but to create sizable social impact with us in the process
Unlocking opportunities, and supporting them through deepening relationship networks, in turn produces positive growth for those opportunities and unlocks new wealth. At their core, early-stage companies often succeed or fail based on their base of loyal customers and partners, their champions, which affinity networks excel at providing. They also live or die based on access to an ever-increasing base of funding support, which effective affinity networks also provide, gradually ramping up both strategic and monetary support for their most successful peers in the network.
Ultimately, this cycle of mutual support creates genuine value in the business marketplace, value that can be purchased by the right strategic acquirer, and unlocks new wealth. The key, then, is to create a virtuous symbiotic cycle where those who unlock new success turn around and become more active members, using their own greater success to assist others in the peer network to become more successful and benefit the world around them.
This post was co-written by Paul Grossinger and Heidi E. Lehmann