The federal government will announce Wednesday a $50-million commitment to finance women-led tech startups, part of an effort to address a chronic funding gap facing female entrepreneurs.
Small Business and Tourism Minister Bardish Chagger will announce at a government-organized women's entrepreneurship conference in Toronto that Business Development Bank of Canada's private capital arm will create a $40-million funding program to invest venture and growth capital in tech businesses led or majority-owned by women. The Crown corporation will allocate another $10-million to initiatives including the MaRS Investment Accelerator Fund that provide early-stage funding to women founders.
BDC Capital vice-president Alison Nankivell said her organization isn't "seeing enough women come out of the accelerators" nor enough mentors available to advise them. "We're trying to address that" through the funding program.
The minister will also announce BDC will make "fundamental changes to how it does business" with women.
"One of the things we heard is that the BDC could bring more of a women's focus to their business practices," Ms. Chagger said in a statement. "That it could play a pivotal role in increasing access to capital for women entrepreneurs in particular, to position women-led firms for future growth. And I agree. As a Crown corporation, BDC should be a leading financial institution supporting women entrepreneurs, and that's our goal."
The announcement follows a 2015 pledge by BDC to increase lending to majority women-owned business by $700-million over three years, which has already led to an 11-per-cent jump in the number of woman-owned clients of the bank.
The Liberal government is seeking to boost Canada's sluggish economy by achieving "inclusive growth" through a series of measures, including the introduction of an infrastructure bank and a new department devoted to pursuing foreign investment into Canada.
Inclusive growth has been elusive in the high-tech sector with regard to gender balance. Women are chronically underrepresented in senior roles in startups and venture firms, and women-led firms are typically undercapitalized relative to their peers: a study by TechCrunch found just 7 per cent of founders at the world's top venture funds are women, while VC firm First Round Capital found female-led companies get just 2.7 per cent of all venture funding in the United States. A study by Bloomberg found that of U.S. startups founded between 2009 and 2015 that raised at least $20-million (U.S.) in venture capital, 7 per cent were led by women.
Canada doesn't fare much better. According to a MaRS Data Catalyst report last year, women occupied just 12.5 per cent of investment roles at Canadian VC firms, and of 600 companies surveyed that raised venture capital, just 5.2 per cent had a female founder. SheEO, a Toronto-based organization that provides networking and financial support to women entrepreneurs, says just 4 per cent of venture capital goes to women-led companies in Canada.
Meanwhile, women hold just 20 per cent of corporate board seats in Canada, according to the government. Among the 10 largest technology firms in the S&P/TSX information technology index, women hold just 17.6 per cent of board seats; three of those firms – Constellation Software, Enghouse and Mitel – have no women directors.
"I think the government is addressing a gap that is not new," said Ilse Treurnicht, chief executive of the MaRS Discovery District innovation hub and one of Finance Minister Bill Morneau's outside economic growth advisors.
"Waiting for an organic change to fixing that is not going to get us the results. This is a bold step …whether it is the right amount is a question, but it's a great start. This is not charity or a nice-to-do; it's a smart business decision. The reality is we simply cannot afford to not have women participate" in the high-growth tech sector.