Empowering Canada’s Women Investors: Enough Talk, Let’s Take Action
Despite Canada’s commitment to creating opportunities for the next generation of women founders, access to capital remains a significant barrier for women looking to launch and scale globally relevant businesses.
Last year, Female Funders and Highline BETA launched the Women in Venture Report. This was the beginning of an ongoing project we’ve undertaken to understand a critical piece of the puzzle: who is on the other side of the table?
We found that as of last year, 14% of partners at Canadian VC firms were women. I have to admit; I wasn’t surprised.
In my career, I’ve had the privilege of having a seat at the table across all stages of company growth – from startups to publicly traded companies. I spent the early part of my career started in investment banking, where I worked with public and private companies to support their growth objectives. At Extreme Startups and Highline VC, we invested in founders alongside angels and other early-stage VC’s across Canada. As a board member at NACO, I’ve had the benefit of supporting individual angel investors and angel groups across Canada.
In each of these roles, the people I have worked with have varied widely. The types of businesses, the scale of the deals, and the industry expertise around the table have been different at every time.
But one thing has remained constant: I’m still often the only woman in the room.
In 2019, most of us can agree that there are not enough women making decisions about the future of industries and innovation, globally. With this year’s edition of the Women in Venture Report, I hope we can uncover more than just the data behind the problem. I hope we can start to answer the question: How do we stop talking about it, and start taking action?
1) Start at the earliest stages, and focus on activating more women angel investors
Women angels are more likely to consider the gender of the founders they invest in. They also have different networks and experience that allow them to build differentiated deal flow. These angels, who have typically been senior executives and leaders in their industry, will not only drive value for founders but will provide perspectives into industries and networks that VC firms have traditionally underutilized by co-investing and sharing deal flow.
At Highline BETA, we know this can have a profound impact. That’s why, through Female Funders, we are creating opportunities for education and access for more women to see themselves as angel investors.
But we also know angels will not change the entire ecosystem alone. Venture Capital firms and later-stage investors are an important influence on startups as they scale.
2) Focus on allocating more capital to gender-focused funds
Funds like the BDC Capital Women in Tech Fund (the largest gender-focused fund, globally), StandUp Ventures and others are doing important work, targeting over $230M+ to back women entrepreneurs in Canada.
But they can’t do it alone. Angels and institutional co-investors will still play a key role in getting the business off the ground, while later stage investors will be needed to provide crucial follow-on capital.
3) Drive increased allocation of capital to funds with women GP’s
With only 14% of partner roles held by women, it’s not surprising that female entrepreneurs are struggling to access capital. There is strong and consistent data that deal flow is often sourced from pre-existing networks. Increasing the number of women investors will drive change on both sides of the table: venture firms with at least one woman partner are twice as likely to invest in women-led startups.
But we also know merely being a woman isn’t enough to eliminate an investor’s bias. Studies show that female founders are asked different questions than male founders are — and that VCs of all genders perpetuate this pattern. There are firms with all-male partners who have backed a diverse group of founders, and firms with diverse leadership teams who still haven’t funded women entrepreneurs.
4) Look to LPs to invest in diverse teams and perspectives
Over the last year, we’ve seen increased recognition among both institutional and individual Limited Partners (LPs) that diverse perspectives drive investment ROI. The ILPA’s new due diligence guidelines, for example, look at both the diversity of investment teams and portfolio companies.
There is a growing understanding that diversity is particularly an advantage for early-stage and emerging fund models, as evidenced by initiatives like the Canadian Federal Government’s VCCI Program.
But this shift alone cannot turn the tide without angels to fill the gaps at the earliest stages, before companies are ready for venture capital investment from these emerging funds.
The challenge of creating models and systems that allow us to support globally impactful companies that serve a diverse population is a multi-layer problem, and there is no silver bullet.
To enact change in our ecosystem, we need all of the above – and more. It’s going to take action among both entrepreneurs and investors to drive real change, and real growth.
I look forward to releasing the upcoming 2019 Women in Venture Report — both to measure and celebrate the positive changes in our industry over the past year, and to dive deeper into the areas we need to do better.
Having more women investors at the table — as angel investors and venture capitalists — will be essential to driving change for our industry.
Because for Canada, this is just the beginning.