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The Business Development Bank of Canada is ramping up support for women technology entrepreneurs, who despite recent breakthroughs still struggle to raise funding.

On Wednesday the federal Crown corporation said it would provide $500-million in new money over the next several years, primarily via an in-house, $300-million venture capital fund targeting women-led companies and $100-million it will allocate to external funds that back women entrepreneurs.

That money will be invested over six years and is in addition to BDC’s existing support for startups and venture capital firms, including its $200-million Women in Technology (WIT) venture fund, which has bought equity stakes in 38 companies with women leaders.

BDC is also committing $100-million for a new initiative it calls the “Thrive Lab.” It will co-invest through the lab with smaller-scale funding bodies to back fledgling women entrepreneurs whose enterprises are too young or undeveloped to attract venture capital but could get there with the help of BDC’s partners. The lab is still in the planning stages.

“We’re inventing something and we gave ourselves the latitude to do this well,” said BDC president Isabelle Hudon in an interview. “If it takes longer than planned, so be it.”

It’s the latest initiative under the government of Prime Minister Justin Trudeau to enhance support for women, although Ms. Hudon stressed “we’ve received no specific marching orders from the shareholder on this.” It’s also a signature move by Ms. Hudon, a long-time proponent of equity for women in the corporate world who joined BDC 13 months ago after serving as Canada’s ambassador to France.

Soon after joining BDC, Ms. Hudon invited Michelle Scarborough, who runs the WIT fund, and her team “to dream big” and report on “what should we continue to do, or do better or more, knowing this clientele is facing many obstacles.”

Those obstacles include chronic underfunding and a scarcity of women venture capitalists, the result of documented systemic biases. That is at odds with data that has shown management teams with at least one woman founder tended to perform better or grow faster than those with all-male teams; they were also better able to attract female talent and recognize opportunities in markets that are generally underappreciated by all-male founding teams. Despite years of efforts to promote the recruitment of women investors and the financing of female entrepreneurs, the proportion of funding for women-led startups fell to 2.3 per cent in 2020 from 2.8 per cent a year earlier. It even slipped further in 2021.

Securing funding is even harder now after a sector-wide crash in valuations. “Fundraising has always been difficult for women and underrepresented groups,” said Kim Furlong, the chief executive officer of the Canadian Venture Capital and Private Equity Association. “This envelope is welcome at a time where fundraising will become more difficult.”

Ms. Scarborough, a veteran startup investor, had already been a key force within BDC, successfully pushing the corporation and government to triple WIT’s original $70-million allotment after she joined in 2017.

She said she encountered skepticism then from venture capitalists who wondered if the fund would be too big, given the perceived lack of women-led startups. In a video interview, both she and Ms. Hudon rolled their eyes at those concerns. “I’ve heard it all,” Ms. Hudon said.

The WIT fund, Ms. Scarborough said, “was designed based on market feedback and what we thought was doable and reasonable. We tapped an unmet need. Fast forward five years and we’ve seen enormous growth.”

WIT has invested $118-million so far in 38 companies, generating a 1.55 multiple on invested capital with a rate of return averaging in the high teens. “We know what worked really well in fund one – we’re building on that,” Ms. Scarborough said. “We have a mandate to return. We’re professional investors. But our mandate is also to have an impact, to create jobs, crowd-in and leverage external capital and ensure these become big companies.”

Women tech entrepreneurs have had two breakthrough years in Canada. Coconut Software, Waabi Innovation, FISPAN Services, Tealbook, Brim Financial, Symend, Bridgit and Arteria AI are among those women-led domestic companies that have each raised tens of millions of dollars. Dragons’ Den star Michele Romanow’s CFT Clear Finance Technology and GeoComply Solutions, co-founded by Anna Sainsbury, reached unicorn-level valuations of US$1-billion or more in 2021, while “unbreakable” pantyhose maker Sheertex Holdings, founded by Katherine Homuth, raised $101-million in April, led by retailer H&M. WIT has backed many of them.

Judi Hess led Vancouver’s Copperleaf Technologies to one of Canada’s most successful tech IPOs last year. Founder-CEOs Carol Leaman of Waterloo, Ont., training software maker Axonify and Joanna Griffiths of Toronto undergarment maker Knix Wear both managed successful “exits” for their investors, selling control of their companies for hundreds of millions of dollars each. Risk and compliance software maker Galvanize, led by Laurie Schultz, was sold for US$1-billion last year.

“There used to be five of us at events, the same women founders,” said Stephany Lapierre, the CEO of Tealbook, a Toronto-based supply-chain software startup that raised US$40-million in 2021 and has grown briskly this year. “Now there are a lot more.” She said early support from BDC and StandUp Ventures – which also invests in women-led startups – have been critical. ‘I wouldn’t be here without that early capital.”