A federally financed venture capital fund that backs technology startups led by women revealed the names of four of its first investments Wednesday – an effort to overcome well-documented systemic biases against female tech CEOs, who struggle more than their male counterparts to raise money.
The Business Development Bank of Canada’s $200-million Women in Technology Venture Fund said it was backing Lufa Farms, a Montreal e-commerce platform co-founded by Lauren Rathmell that sells produce grown in urban rooftop greenhouses; tealbook, an artificial intelligence-powered platform based in Toronto and led by CEO Stephany Lapierre that simplifies procurement for large companies; Montreal-based photography image bank Unsplash, co-founded by Stephanie Liverani; and Vancouver’s AvenueHQ, an online real-estate marketing startup founded by couple Rebecca and Chris Troelstra.
“If these companies all do really well and these women CEOs and co-founders and leaders do well and repeat the cycle, then I think we’ve had a win,” said Michelle Scarborough, a veteran venture capital investor who joined BDC in the spring of 2017 and leads the fund.
The fund was originally set at $50-million in 2016 and increased to $70-million last fall. After consulting with entrepreneurs and investors across Canada, Ms. Scarborough persuaded the government to almost triple the size in last spring’s budget, arguing the fund needed to be much larger to help finance female startup entrepreneurs until they had scaled up their firms.
Ms. Scarborough said the fund has been structured to “be a best-in-class venture fund the way any other fund would be,” with potential investments assessed on the same criteria that any other venture capital firm would apply, including the potential market size and whether the company had the ability to disrupt market leaders.
“Why would we do any different?” she said. “We expect to partner and syndicate the best investments in Canada. I think it’s imperative everyone in the venture industry step up to the plate to look at how they view investing in women-led teams and, if there is bias, recognize it and get out of your own way.”
The BDC fund is one of several recent Canadian efforts to correct the course of inequity in Canadian venture funding, including MaRS’s $5-million StandUp Ventures Fund and the newly launched Disruption Ventures and Relentless Venture Fund, based in Toronto and Vancouver, respectively.
Studies such as a report this week from Female Funders have shown that Canada’s technology sector has some of the same gender-inequality issues as Silicon Valley, with women underrepresented among the ranks of venture capitalists and in senior business leadership roles. Despite studies showing that women-led businesses perform better than those with no female leaders, startups with female founders have been shown to attract relatively less venture capital than those founded by men.
“There is this idea if you’re a female-founded company you must not be very ambitious,” said Ms. Troelstra of AvenueHQ, who knows of female founders who have brought male employees to investor meetings just to lend an air of credibility with male investors.
Ms. Lapierre of tealbook said a male financier once told her she had “zero chance of raising money” because she had a French accent, hadn’t attended an Ivy League school and has three children, “things he’d probably never say to a guy.” She acknowledged that having seasoned male tech-sector veterans on her management team has “given investors confidence [that she] could attract a team and build” a company, but after speaking to hundreds of investors, she has so far raised institutional money only from the BDC fund and StandUp, out of a total of $4.7-million raised so far.
Asked if she would have had the same issues if she were male, she replied: “I would have raised capital way faster. Women in general have to move more mountains to show we have what it takes to build companies.”
Ms. Scarborough said she expected her fund to make 10 investments in 2018. The BDC fund has so far invested about $7-million in 14 startups.