The federal government is expanding its venture-capital funding to female-led startups in the face of mounting concerns women are underrepresented in senior roles at tech companies and that their enterprises don't attract as much financing as those led by men.
Business Development Bank of Canada (BDC) on Wednesday will announce it is increasing a $50-million commitment to finance women-led tech firms made one year ago by $20-million. The $70-million fund is to be invested over five years.
"With the additional investment announced today, the BDC's funding envelope to support women in tech becomes the largest of its kind in North America," federal Small Business Minister Bardish Chagger said in a release.
Of the total funds, $60-million will be dedicated to invest directly in firms – up from $40-million previously – while $10-million has been set aside to make indirect investments in regional initiatives, including $5-million committed earlier this year to the women-oriented StandUp Ventures Fund I, managed by the MaRS Investment Accelerator Fund and led by Michelle McBane.
Michelle Scarborough, managing director of strategic investments and women in tech at BDC, said the additional funds gives BDC "enough runway" to not just invest in early stage financings but also subsequent funding rounds to ensure successful startups have enough support to fuel their growth.
Since the fund's launch last year, BDC has made nine investments, totalling $3-million, in women-led firms. BDC's most recent investment is part of a $5-million venture funding by Nudge Rewards, which makes an app to boost employee performance in the retail, food-service and hospitality sectors, led by co-founders Lindsey Goodchild and Dessy Daskalov.
"Lindsey and Dessy are great examples of female founders that have identified a gap in growing markets, are using technology to solve an important problem, and building a business with massive potential to scale," Ms. Scarborough said. The Nudge funding was led by Generation Ventures with participation by Brightspark Ventures and StandUp Ventures.
The increased BDC funding follows this month's release of a landmark study by new Toronto organization called #movethedial, co-authored with PwC Canada and MaRS Discovery District, that found women account for just 5 per cent of CEO roles in the Canadian technology sector. More than half of tech companies have no women in management and 73 per cent have no women on their boards, the report found.
Despite several studies that have shown companies with female senior executives perform better than those with none – including a report by San Francisco-based seed-stage venture firm First Round Capital – only 2.7 per cent of companies that received U.S. venture capital backing had a female CEO, according to a 2014 study by Babson College.
"There is still much work to do," Ms. Chagger said. "I am proud of the fact that today, women have more resources than ever to scale their companies" and expand the economy.
The fund announcement follows a 2015 pledged by BDC to increase term lending to majority women-owned businesses by $700-million over three years. BDC surpassed that objective in 30 months and has now reached $809-million in loans.