Think everyone with a great idea gets a fair shake in the world of venture capital? Think again.
According to new data, companies founded by women received just 2.2 per cent of the venture capital money invested in the United States in 2018. That’s down from the 2.5-per-cent level reported for 2017. “The fundamental issue remains that the bulk of large dollars are going to male-only founders,” said Eva Ho, a leader at All Raise, an organization that supports women in startups.
How tilted is the playing field? Fortune points out that in 2018, all U.S. female founders put together received US$10 billion less in funding than the e-cigarette company Juul.
The story is much the same in Canada, where female founders receive only 4 per cent of venture capital – and face obstacles in gaining access to other kinds of investments. Put simply, women are still getting only the thinnest slice of the funding pie.
This has to change. And only venture capital firms themselves can change it. VCs need to expand their horizons and break free from their ongoing focus on male-dominated firms. I’ve been around long enough that I’ve heard all the excuses about why it can’t be done. Let’s get past that outdated thinking.
As citizens of a country that benefits from good companies that create good jobs, we all have an interest in seeing that women entrepreneurs are supported the same as their male counterparts. On a per capita basis, female entrepreneurs create more jobs than male entrepreneurs in Canada. And female-led businesses have higher survival rates than those led by men.
But most venture capital firms persist in defining “innovation” narrowly. As a result, the bulk of available funding still goes to tech businesses, which are overwhelmingly led by men. (According to a 2017 report, more than half of Canadian technology companies have no female executives at all. That’s right: zero.)
In my view, the VC obsession with technology persists not because decision makers are consciously gender biased – but because they are industry biased. They see others investing in tech and, over time, they become effectively blinded to other fields. Heaven forbid they support a consumer packaged goods company created by women. What would their VC friends say about that down at the club?
Technology firms are obviously important. But programs and funding should be available to more diverse industries, including those where women play a larger role.
There are some pockets of progress. Ryerson DMZ – a startup incubator at the Ontario university – has a program that offers hand-on support to women founders of tech companies. The focus is on winning contracts and reducing sales cycles. It’s a promising initiative. Meanwhile, BDC Capital has created a $200 million venture fund focused on women-run firms. The goal is to help them scale their businesses to become globally competitive.
I’m trying to be part of the solution, too. I recently became one of the very few women in Canada to create and manage a venture capital fund. (It probably won’t surprise you to hear that the majority of VCs are male dominated.)
I look forward to my fund continuing to support our country’s entrepreneurs – women and men. I know how hard it is to raise money as an entrepreneur. And I know it’s even harder when you’re a woman. So far, more than half of the companies we’ve funded have female founders.
I also take pride in being open to supporting new and budding entrepreneurs. Too many in the VC community immediately turn away those who lack experience – another factor that favours men.
In our highly competitive world, investors should be squarely focused on creating the conditions in which all Canadian entrepreneurs – women and men – can make the most of their ideas, their ingenuity and their drive. That’s the path to prosperity, for VC firms and for our country.
To get funded, you should need a killer idea and a bulletproof plan. You shouldn’t need to be a man.