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Growth Where are all the female founders and investors?

Across the country, women are making strides in sectors such as financial services and in boardrooms, but little progress is being made in the entrepreneurial world

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Across the country, women are making strides in sectors such as financial services and in boardrooms, but little progress is being made in the entrepreneurial world. The dearth of women in startup circles represents not only fewer role models the next generation of entrepreneurs, but also lost economic opportunity for Canada, experts say.

Among women who are starting companies, few are scaling those businesses, in part because they aren't as entrenched as men in the venture capitalists and angel investor space, where money is raised to build and grow companies.

"Where are all the women?" said Ottawa-based entrepreneur Fiona Gilligan, who has started a handful of highly profitable businesses in her career to date, and is now an angel investor. While Facebook's Sheryl Sandberg is calling on women to 'lean in,' Ms. Gilligan argues what women really need is to be welcomed into the male-dominated entrepreneurial ecosystem and help to create more opportunity.

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"There are a lot of financially successful women who want to invest in emerging entrepreneurs. If we aren't invited to the table then we don't get investment opportunities...I don't think it's a conspiracy by guys, I just think they don't get how important women are," added Ms. Giligan.

In fact, a new U.S. report shows that venture capital firms that invested in women-led companies outperformed those that didn't. Conducted by the U.S. Small Business Administration (SBA), the study offers two possible reasons for this: Wary of investing in female-led businesses, VCs might do "more vigorous due diligence" leading to better investments. The second explanation is that "a heterogeneous management team" might perform better.

Another explanation, put forth by John Tozzi of Businessweek, may be that that if the venture capital market is an old boys club, biased against women, those that invest in women-led companies have their pick of good opportunities that others overlook.

But despite the growing body of evidence supporting the economic potential of women-led enterprises, the "entrepreneurship gap" between men and women in Canada continues to be "striking," according to a 2012 report by TD Bank, especially given that women make up half of the work force and more than half of post-secondary students in Canadian schools.

"Women's underrepresentation relative to men among the self-employed has seen little improvement over the past decade," said TD deputy economist Beata Caranci in the report.

The TD report also finds that women who do branch out on their own tend to run smaller businesses and exhibit slower growth than their male counterpoints, at least in terms of revenue.

While women make great entrepreneurs, it's still a male-dominated sector, especially in the tech startup space, explains Eugene Bomba, PricewaterhouseCoopers' (PwC) emerging company services leader. A soon-to-be released report from PwC shows that women still only make up 27 per cent of the work force among Canada's emerging software and technology firms, and 24 per cent of their management teams.

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Female entrepreneurs represent "an untapped source of economic opportunity," according to a 2012 report from Taskforce for Women's Business Growth at the University of Ottawa.

"A 20-per-cent increase in total revenues among majority female-owned enterprises will contribute an additional $2-billion per annum to the Canadian economy," states the report, which called for better education, training and policy to support female entrepreneurs.

While it can be argued that some women have different career motivations than men – including "greater risk aversion and a stronger emphasis on work-life balance," according to TD's Ms. Caranci – women are also more conditioned to choose "safe" career paths – doctors, lawyers, teachers, etc. – starting at a young age.

This 'playing it safe' approach even applies to women in traditionally male-dominated fields such as engineering, according to Ms.Gilligan. "Instead of going out to be an engineer and work for somebody, they can be a female founder their own company," she said. "We need to create networks where little girls look at someone like me and say, 'Wow. I can be a doctor or lawyer, but I can also be an entrepreneur."

Michele Romanow, co-founder of e-commerce company Buytopia.ca, said it's more challenging for women because there are few peers for them to look up to.

"I think with entrepreneurship we're more behind than in other industries because there are few of us there…which means fewer success stories," she said.

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But Nicole Verkindt rarely notices that she's one of the few female entrepreneurs in her industry. "Women in business haven't helped me in any way. In fact, they've almost stopped me," said Ms. Verkindt. Instead, what really surprises the founder of aerospace software firm OMX, is how little support she feels she has received from fellow female entrepreneurs. While she's received support from fellow aerospace firms by region, there hasn't been support by gender.

"It's been very rare for me to find other women in business who are pro-actively trying to help my business, it's a funny thing," she said. "We should be supporting each other, not because someone is a women, but because they are competent and have a great idea and bring real value."

Women that do choose entrepreneurship also need to be prepared for a very different lifestyle than many of their female friends and family. That might include holding off have kids until later in life, which is what Ms. Gilligan did by waiting until age 37 to have her first child, once she established her first company.

"If you want to be an entrepreneur you can't easily do motherhood at the same time, and nobody wants to hear that because it's politically incorrect," said Ms. Gilligan when asked to offer advice to other female entrepreneurs. "Women can have it all, they just can't have it all at the same time."

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