Michelle McBane, Senior Investment Director at MaRS Investment Accelerator Fund and Managing Director at StandUp Ventures in Toronto on May 17, 2019.Christopher Katsarov/The Globe and Mail
A venture capital fund that invests in women-led companies has raised $18-million from a group of investors, including three Canadian financial institutions that are looking to strengthen their ties with Canada’s technology entrepreneurs.
StandUp Ventures, a fund launched at Toronto’s MaRS Discovery District and led by Michelle McBane, has secured financing commitments from a conglomerate of investors, including three financial institutions – Royal Bank of Canada, the Canadian Imperial Bank of Commerce and Vancity. Other investors include the Business Development Bank of Canada (BDC), Export Development Canada, Northleaf Capital Partners and several angel investors.
It’s aiming to raise an additional $7-million in a second financing round, which would bring the fund to a total of $25-million.
A number of reports have highlighted the significant gender imbalance in the Canadian venture capital sector and the companies it funds, leading to calls for greater diversity.
The second annual Canadian Women in Venture Report, published earlier this month by seed-stage funding firm Highline BETA and advocacy group Female Funders, found that 85 per cent of the money invested in Canadian venture capital funds last year went to funds with no female partners.
“Women are on the sidelines right now from massive wealth creation in the innovation economy," Ms. McBane said in an interview.
“Our goal is to really get more women founding companies, standing up, doing their thing, understanding that you don’t have to be a tech founder to start a tech company; you can be a woman with an amazing business idea.”
StandUp launched in May, 2017, with BDC as its anchor investor. Since then it has made seven investments, the latest of which went to Sampler, an online platform to help marketers manage the distribution of product samples. The other companies in its portfolio are Bridgit Solutions, Coconut Software, Emovi, Nudge Rewards, and tealbook.
The fund is planning to invest the additional capital it has raised in at least a dozen new companies over the next three to five years. The additional financing also allows StandUp to write bigger cheques.
It’s imperative to get more women into venture capital because women are more likely to invest in companies led by women – particularly at the earliest stage in a company’s life, Ms. McBane said.
At the seed stage, “there’s not a ton of data,” Ms. McBane said.
"You’re betting on a founder and a team and an idea. Once you get to series A, B or C, you’ve got a lot of metrics and you kind of wash away all of that bias that’s fairly well documented at the seed stage for female founders.”
It’s also easier to promote diversity if you do it from the very beginning, she added. Often when a company first starts, the founder hires his or her friends, colleagues or classmates.
“If you’re a bunch of guys, you’re going to hire a bunch of guys that you went to school with and you end up with an Uber," Ms. McBane said. “So we’re trying to balance that out early on and have women in leadership roles, drawing from a broader pool of talent as well.”
Alexandra Posadzki