On Bridging the Gap for Women in Business
March 8 is International Women’s Day. On this day, and everyday, we celebrate women in business with a focus on women entrepreneurs and investors. Women’s participation in the economy adds valuable contributions to our society yet women continue to face barriers to success. We address these challenges and spotlight the ways in which we can bridge the opportunity gap for women in business.
Why should we support women in business? It’s the right thing to do and it’s the smart thing to do.
According to the Government of Canada, advancing gender equality and women’s participation in the economy could add up to $150 billion in GDP. It is estimated that a 10% increase in female majority owned firms in a decade could boost economic activity by $198 billion. Beyond participation, bridging the revenue gap for women entrepreneurs could unlock an additional $88.2 billion in contribution to the Canadian economy.
Firms with women representation are more profitable. Women board representation is positively related to accounting returns. In venture capital, firms that increased their female partner hires by 10% saw an average 1.5% increase in returns each year, and 9.7% more profitable exits. When women join the C-Suite, firms benefit from a diversity of voices and also become more open to change and less open to risk, improving on sustainability and the ability to adapt to changes such as the current shifting economic conditions.
The value of women’s participation in the economy is clear yet women entrepreneurs continue to face barriers to success.
While women represent half the population in Canada, only 17% of small- and medium-sized businesses are owned by women. Between 2014 and 2019, nearly 90% of venture capital investment deals in Canada went to companies founded exclusively by men. Racialized women in particular experience this barrier profoundly; for example, in a survey of 700 Black women entrepreneurs, 78.5% agreed that access to financing is an obstacle.
Women entrepreneurs face unconscious biases putting them at an unfair disadvantage. Investors are 60% more likely to invest in pitches presented by men than women. Pitches made by women are more heavily judged on presentation than content. Women are more likely to be asked about the potential for losses while men are asked about the potential for gains, leading to funding gap sizes of up to seven times less for women entrepreneurs.
While women in venture capital are more likely to invest in women founders, this support is a double-edged sword. Women-led companies receiving their first round of funding from exclusively women investors are two times less likely to raise a second round of funding. This is due to investor bias assuming women founders backed by women-only investors are less competent regardless of qualifications.
Women in business face unique challenges. For one, they are more likely to be affected by family life, with motherhood leading to career and pay penalties much more so than fatherhood. Women also spend more time doing unpaid labour; in Canada, women spend an average 1.5 times more hours than men doing unpaid work.
Time’s up for bridging the opportunity gap for women entrepreneurs.
Bridging the opportunity gap for women entrepreneurs will create a more equitable society and add immense contributions to our economy. While we still have a long way to go in breaking down barriers for women, there are immediate steps we can all take to continue advancing this progress. For start, we can:
- Support more women in venture capital, who are two times more likely to invest in women founders but make up only 19.4% of partners at venture firms. Firms can also implement Gender Lens Investing (GLI) as a strategy.
- Support more women founders. Startups with at least one women founder go on to hire 2.5 times more women, creating an exponential effect on women’s participation in the economy.
- Commit to gender-balanced organizations by embedding diversity, equity and inclusion (DEI), the Gender-based Analysis Plus lens and 50-30 Challenge into hiring practices.
- Design networking opportunities that welcome and understand women’s backgrounds and business ideas to encourage more women to network and access funding opportunities.
- Establish inclusive environments for business development, including having more diversity on pitch panels and as product evaluators to counter the biases women face in their entrepreneurial journeys.
- Address the unique challenges women in business face and create women-friendly work supports. Better parental leave, access to childcare and reproductive healthcare — while these don’t necessarily address the root causes for why women’s careers are more heavily penalized by starting a family, they certainly do help.
- Conduct more research on women’s entrepreneurship that consider the intersectionality of gender and race. We know racialized women face unique barriers but most research on entrepreneurship thus far have centred around gender or race but not both.
While these are all effective ways to support more women in business, it’s important to note the burden of closing the opportunity gap should not rest just on the shoulders of women. Men need to be allies and participate in creating environments and opportunities for women to equally participate and succeed in the economy.
What InBC is doing to support women in business
InBC is actively working to support more women in business, including women entrepreneurs, investors and more women at the conference table.
We have embedded diversity, equity and inclusion (DEI) from within, and are committed to the 50-30 Challenge and hiring with a Gender-based Analysis Plus lens. The InBC team is proud to be gender-balanced, including women in leadership positions. We have and are building an organization that reflects the diversity in our population and with a range of backgrounds to understand different business models and ideas.
We encourage and share learnings around DEI practices within and outside our portfolio. Each investment we make aligns with at least one of our impact objectives, which include elevating inclusive communities. We also work with the companies and funds in our portfolio to increase the diversity in their organizations and set impact metrics they can report on. We are developing a program to mentor first time fund managers, to increase the number of investors in the province including more women investors.
We partner with and support organizations working in this space, such as The Forum, a Canadian-based charity providing women entrepreneurs with the community and resources they need to thrive in business, Canada51, an organization dedicated to increasing women’s participation in the innovation-driven economy, and Canadian Women in VC, a grassroots organization supporting the professional development of women in venture capital.
We are building an inclusive intake process that is fair and transparent. We want to encourage a diversity of entrepreneurs and companies to submit their ventures to be considered for investment. This includes engaging with underestimated communities through the entrepreneurial and business development ecosystems across all economic regions of the province.
This International Women’s Day, we voice our support for women in business and we encourage you to do the same. #iwd2023
Learn more about InBC’s impact objectives here.