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Lauren Robinson, a partner at Highline BETA and executive director at Female Funders, says access to capital remains a barrier for female entrepreneurs.Rafal Gerszak/The Globe and Mail

Eighty-five per cent of money invested in Canadian venture-capital funds last year went to funds with no female partners, a new report says.

Gender imbalance in the Canadian venture-capital (VC) sector, and the companies it funds, has long been widespread. But even as more voices are calling for diversity in the innovation ecosystem – and an increasing body of evidence that diversity can improve investing returns – Highline BETA and Female Funders’ second annual Canadian Women in Venture Report reveals that venture investors aren’t necessarily doing much about it.

Highline BETA, a startup co-creator and seed-stage funding firm, and Female Funders, a diversity-in-venture-capital group, will release their report on Tuesday. They conducted their analysis with publicly available data from firm websites, LinkedIn, the Canadian Venture Capital & Private Equity Association (CVCA) and the tech-insight website Crunchbase. In Canada, they examined the title and gender of 650 team members from 55 funds valued at $5-million or higher, worth a collective total of about $6.1-billion.

Of that, the study found that $4.6-billion in venture capital was invested in active funds with no female partners. In fact, only 15.2 per cent of partners in Canadian venture firms are women – up only 1.2 percentage points from a year ago. Only 11.8 per cent of managing partners at venture funds in Canada, meanwhile, are women.

And venture-capital funds in Canada with all male partners at the helm are, on average, 1½ times larger than funds with any women partners at all, the report says – despite the greater likelihood of women-led funds investing in women-led businesses, which themselves are underserved investment opportunities.

“When you think about how much focus Canada has taken in championing the next generation of [women] entrepreneurs, access to capital remains a barrier,” said Lauren Robinson, who is both a general partner with Highline BETA in Vancouver and the executive director of Female Funders. “We don’t have decision-makers at the table that are representative of the population.”

Whitney Rockley, managing partner at McRock Capital in Toronto and the co-chair of the CVCA’s diversity and inclusion program, said she hoped that investors and limited partners will see Female Funders’ statistics and become more mindful of diversity efforts. She did, however, point out the finding that 10.3 per cent of venture partners at Canadian firms − partners brought on to manage investments but who are not full, permanent members of a partnership − are women. Last year, that number was zero. “It shows the awareness and word has gotten out there, and people have been mindful and changed that,” Ms. Rockley told The Globe and Mail.

But the number of partners with a say on investment decisions rose by barely one percentage point, which, given Canada’s size, means that at most a handful more women were hired as partners or launched funds in the past year. One of those was Disruption Ventures, which Elaine Kunda announced last spring and that has since raised $13-million of a $30-million target to invest solely in companies founded or run by women.

Ms. Kunda called the Female Funders figures a “shocking" missed opportunity. “If 50 per cent of the population were underutilized, but proven to outperform the sector, would you like to invest in that?" she said in an interview. "If the split wasn’t over gender, the answer would be, ‘Yes.’ ”

Female Funders hopes that by putting its data into the public eye, investors can make more informed choices now rather than wait a decade for new hires to rise through the ranks of VC firms. “There’s no real low-hanging fruit in terms of having a drastic impact in the short term, but everything that we’re doing is building toward a momentum,” said Kim Furlong, the first female chief executive in the CVCA’s 45-year history.

Ms. Furlong highlighted the incorporation of gender and diversity requirements in the federal Venture Capital Catalyst Initiative and the Business Development Bank of Canada’s Women in Technology Fund as evidence of a “directional shift” in fund allocation.

She’s already seen VC-fund investors putting requirements in place on gender diversity. Still, Ms. Furlong said, “there’s so much work to do in this space," not just to get women on investment teams, but to see that those investment teams can invest in more women-led companies.

When Gerri Sinclair, now managing director at Kensington Capital Partners, founded an early internet company, she said she had “no role models” to look toward in venture capital. She’s since been part of a change she hopes others will join her in: 40 per cent of her management team are women and she encourages both women and men to advocate for women to lead in the VC sector. “More people should speak on behalf of women,” she said.

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