Thursday, February 4, 2010

Galileo Sets Up LGBT Capital for Gay Market - but do they have credibility?

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It seems the LGBT community is all atwitter over news from Galileo Capital Management of a Gay Capital Fund that is going to come to the rescue of LGBT businesses which are unable to negotiate loans from traditional sources. And to that I say, "show me the money." NY Times story

With hundreds of recent investment scams built on porous foundations and promises, excuse me if I don't buy the line.

Like a politician promising something in the future, but never delivering, this is one more investment scheme with a great premise and no track record. That's a red flag. They may indeed prove to be the best thing ever, but more likely, they are just saying what they think gays want to hear.

They do not self-identify as LGBT. In fact the connection seems strictly to raise cash. What they surely are is investment types who worked with some of the biggest banks and investment firms in the past decade that led us down the primrose path to the current economic mess.

Founders Anders Jacobsen and Paul Thompson have over 40 years’ combined experience in the investment management sector at firms including Goldman Sachs, Prudential Financial, Bankers Trust and Chase Manhattan Bank.

Thompson says: “We have identified a number of investment strategies in niche areas offering a low correlation to markets that are still significantly untapped. Our expertise in structuring and launching investment funds will enable us to bring these strategies to market quickly and effectively”.

Jacobsen adds: “The future of Galileo will witness niche positioning and effective maximization of opportunity in markets that are quite unexplored to date. Our strategy will pick up in areas which the market has traditionally dropped off its radar screen.” quotes from Hedgeweek

It is true that the LGBT consumer market is huge; it's worth nearly $700 billion and is projected to reach $845 billion by 2011, according to the National Gay and Lesbian Chamber of Commerce.

Galileo may just be testing the water, measuring how much interest such a move could generate. It seems they have neglected to say when the fund would be launched. Another red flag.

If you want to consider investing, I say wait a while, do serious due diligence, and don't jump in too deeply. I still think if you want to make your dollars do good, invest in local banks and firms, not the monolithic ones, and their spawn.

1 comment:

Anonymous said...

I think your caution about the LGBT Capital Fund is well-founded. I think 1 or 2 self-proclaimed gay banks were launched 10 or 15 years ago, but they apparently didn't last long. Am surprised the NY Times didn't wait until the Fund issued a prospectus before giving them a plug.
On a somewhat related theme, I have to say I get tired of paying a premium for goods or services just because they are "gay." Just checked out a Caribbean gay cruise that will sail from Fort Lauderdale in March. It's very similar to a mainstream one that my partner and I will board the day before. The "gay" version will cost nearly three times what we'll pay. And I'm sure we've all had experiences with gay resorts that aren't anything more than a Holiday Inn but charge twice as much. -- BeachcomberT in Daytona