Moving From Searchlight To Beacon: An Opportunity For Canadian Venture Capital Firms Dedicated To Increasing Their Investment In Women‑Founded Firms
The May 7th, 2019 report by Highline BETA and Female Funders on Women in Venture Capital shows that only 11.8% of managing partners in Canada’s venture capital industry are women; fewer still at the venture partner level (10.3%). The report also says that $4.6B or eighty-five per cent of money invested in Canadian venture-capital funds last year went to funds with no female partners. More than 50% of tech companies still have no female executives.
In the United States, TechCrunch reported that U.S.-based female-founded startups have raised just 2.2 percent of venture capital in 2018—about the same amount as the prior year.
With the amount of attention focused on addressing gender imbalances at the leadership and portfolio levels around the world, and, government pressure on Canada’s venture capital firms to improve gender balance in the industry since 2015, we are starting to see more progress.
Cultural transformation within the venture capital sector takes time. While we should celebrate progress, and there has been some progress (Highline Beta reports that the number of publicly disclosed venture partners who are women increased from 0% to 10.3% the last year) we must do more. Working to address gender bias at the individual firm level is a start, however, but if we want to go far as an industry, we need to go together.
The Billion Dollar Fund for Women (TBDF) initiative is an opportunity for our industry to do just that.
What is the Billion Dollar Fund?
The Billion Dollar Fund was established in 2018 at the annual meeting of the IMF/World Bank and asks VC firms from around the world to pledge a total of $1 billion USD towards the financing of women-founded companies (in any sector). Once signed up, those who pledge have until 2020 to follow through. The initiative is part of achieving The UN’s Sustainable Development Goal #5-gender equality.
In a post on the fund’s website, Shelly Porges, Co-Founder and Managing Partner of TBDF Women says “TBDF Women is a consortium of venture funds pledged to invest more into women-founded companies through 2020, with each venture fund retaining its independence, designating the amount of its pledge, and managing and sourcing its own deal flow to fulfill its pledge. Ours is an effort to encourage increased investments into WFCs by inspiring and strengthening the venture funds that do this important work. Our goal is to attract investments into the venture funds by institutional and private investors looking to gender-diversify their portfolios as they seek improved returns.” Porges adds “As we like to say, when you invest in women, you’re in good company.”
Canadians stepped up to the TBDF plate in early 2019. Lally Ramentilla, the fund’s Canadian lead and president of Quantius is leading the charge. In a February blog post by Cycle Capital Management, Rementilla says “The Billion Dollar Fund for Women is a simple and elegant way for venture capital firms to show their support for female-founded companies. If you say that you support female entrepreneurs, you make a pledge and join the consortium. We are mobilizing existing funds to work together towards a common global goal, to empower female entrepreneurs. As of May 2019, Marigold Capital (Canada’s first pledge), Cycle Capital Management, Ecofuel Fund, Pique Ventures, Grand Challenges Canada, BCF Ventures, Dream Maker Ventures and StandUp Ventures have agreed to participate, alongside Quantius.
It’s a start, not a finish. So, we are urging all Canadian venture firms to sign up.
What does pledging involve?
The first step is to visit the site and download the pledge form. The form asks about why you believe that investing in women is important and to also share an example of how you have recently invested in women.
Pledgees are then asked to pledge a dollar amount which will go towards women-founded companies through to 2020. Those signing the pledge are also asked to commit to:
(1) Ensure that women-founded startups are included in deal flow and highlighted to their investment committee;
(2) Increase their overall investment in women-founded companies, by the target amount they have specified by 2020;
(3) Commit to providing constructive feedback to women who pitch and are declined; and
(4) Commit to share TBDF initiative with others in their networks for a multiplier effect. They reserve the right to cancel the above at any time by providing 30 days written notice, which will be reflected in new campaign materials. They hereby certify to the best of their knowledge, the compliance in all material respects with applicable securities regulations, but in no way hold TBDF responsible for their representations.
When you join the consortium, you will also receive increased exposure to global institutions such as international development funds, country funds, sovereign funds, private equity and larger funds. You can attend the Billion Dollar series and annual convenings which connect partners in the fund (at your own expense), and an opportunity to join a fund marketplace and be considered in a woman managed Fund of Funds. Finally, TBDF’s consortium partners can exchange experiences, learn from each other, and avoid duplications and mistakes.
What happens after 2020? According to the TBDF website, investors/pledgees will “be encouraged to re-invest their initial investment in women-founded businesses. The cycle will be repeated until a total of $1billion incremental dollars have been invested.”
Clearly women-led ventures are out there; The are hungry to grow.
For far too long the venture capital scene in Canada has operated more like a search light looking for deals on familiar seas.
With the Billion Dollar Fund initiative, we can instead, operated more like lighthouse beacon. Women-founded companies suitable for venture capital types of investments are out there. By becoming a pledgee, you are helping them find you.
Don’t wait. Act Now. We did. Join the Billion Dollar Fund for Women.
Please join us for a special breakfast briefing on The Billion Dollar Fund featuring special guest speaker and co-founder, K. Shelly Porges, being held on Friday, May 24th, 8:00 AM‑9:30 AM at EY – 40th Floor, 100 Adelaide Street West. (Limited Partners are welcome)
To register or for more information, please contact TBDF Toronto representative Jonathan Hera at jonathan.hera@marigold-capital.com
