March 8 marks International Women’s Day. International Women’s Day is a global day celebrating women’s social, economic, cultural, and political achievements. The day also marks a call to action for accelerating women’s equality.

The theme of the Government of Canada’s International Women’s Day (IWD) 2024 is Invest in Women: Accelerate Progress. It’s a call to action and a reminder that gender equality is one of the most effective ways to build healthier, prosperous, and inclusive communities. By eliminating barriers and promoting diversity, the entrepreneurship ecosystem in Canada could contribute up to $150 billion to the GDP by 2026!

There could not be a better theme for IWD than “Invest in Women.” Capital is a cornerstone of entrepreneurial endeavors. Angel investors, mainly through angel groups, play a vital role in early-stage financing for start-ups.

Angels play a critical role in the entrepreneurial ecosystem- not only do they fund early-stage start-ups, but they are often actively involved in the start-ups they invest in, making them invaluable to the entrepreneurs they fund. Angels act as mentors and advisors to the start-ups they invest in, increasing the chances of start-up success.

Invest in Women
The issue of funding inequalities for start-ups is a well-known problem. Women entrepreneurs, in particular, face significant barriers, with only 17% of small and medium-sized businesses in Canada being owned by women. Access to capital is a significant challenge for women trying to establish or expand their businesses. Women are less likely to seek debt and equity financing, and even when they do, they are more likely to face rejection or receive less funding on average than their male counterparts. It is critical to have equal representation on both sides of the table, both for the founder and the funder, to close the gender gap.

Studies have consistently shown that women-led businesses tend to outperform those led by men. A report by the Boston Consulting Group titled “Why Women-Owned Start-ups Are a Better Bet” found that women-owned companies deliver more than twice as much per dollar invested compared to businesses founded by men. This makes them significantly better investments for financial backers. Despite facing challenges regarding investor capital and support, companies founded by women ultimately generate higher revenue.

Data published by the U.S. Census Bureau, Dow Jones, the Harvard Business Review, and others from 10 private and public studies conclusively show the following:

  1. Women-owned firms generate significantly higher revenue than male-owned firms.
  2. Women-owned firms create substantially more jobs than their male-owned peers.
  3. Women are more effective in Senior Leadership roles.
  4. Women executives significantly improve company performance as compared with men.
  5. Women have a much larger appetite for growth and success than their male counterparts.

Despite these facts, male entrepreneurs are known to raise higher funding levels than their female counterparts. There is not one underlying for this disparity, but much of the research done and data collected focuses on gender bias.

Confronting Biases 
A field study conducted on question-and-answer interactions at TechCrunch Disrupt New York City from 2010 through 2016 reveals that investors tend to ask male entrepreneurs promotion-focused questions and female entrepreneurs prevention-focused questions and that entrepreneurs tend to respond with matching regulatory focus. We ask men to win and women not to lose– or instead, we ask men how they will make money and women how they will not lose money. This difference in questioning has significant consequences for entrepreneurs. While promotion and prevention questions may ultimately ask the same thing, they would not be answered the same way; when asked a prevention-focused question, you will most likely respond on the defensive. Promotion questions elicit conversation around gains and growth; prevention questions drive a conversation around how founders may achieve results or look at potential losses. The same field study found that entrepreneurs can significantly increase funding for their start-ups when responding to prevention-focused questions with promotion-focused answers.

A Record Share 
Female founders increased their share of U.S. V.C. capital raised in 2023, according to the latest U.S. All In: Female Founders in the V.C. Ecosystem report by PitchBook. The All In report series presents data surrounding female founders and investors in the U.S. venture capital ecosystem. Female founders and co-founders secured 27.8% of deal value last year in the U.S. This annual report by Pitchbook has found that female founders still secured more capital in 2023 compared to 2020, marking the third-highest annual level on record and indicating resilience in the face of prolonged V.C. concerns.

Accelerating Progress 
A number of resources and programs have been emerging in Canada, thanks in part to the Government of Canada’s Women Entrepreneurship Strategy. You can find a list of resources for women-led businesses on our website here.

Women angel groups are more likely to attract women-led businesses, and the percentage of women entrepreneurs seeking capital from women angel groups is more than double that of the male-dominated angel groups. Women angels tend to be motivated by the desire to attain financial returns and to assist women entrepreneurs in growing their businesses.

Canada’s leading women’s capital, expertise, and networks are underutilized- but hopefully not for long! In Canada, the number of women who are accredited investors (and, therefore, potential angels) is growing quickly. In the last decade, the total number of women earning at least $250,000 jumped by 49% – 3 times the 16% increase in men in the same period. In 2015, women accounted for a record 23% of the top earners (Statistics Canada, 2017).

One group taking advantage of the pool of Canada’s leading women is The Firehood, co-founded by Danielle Graham and Claudette McGowan. The Firehood is a movement focused on increasing women’s participation, leadership, and prosperity in technology. After raising an angel stage fund for women entrepreneurs, they recognized a gap in the angel ecosystem for a network of diverse women who wanted to learn how to invest, analyze, advise, and support women-led start-ups.

Recognizing the unique challenges that women entrepreneurs face is crucial to fostering an inclusive and diverse innovation ecosystem. To understand what’s truly happening on a larger scale and put personal experiences into perspective, it’s essential to examine data and trends. Men in angel groups and ventures must understand these numbers and be part of the solution to bridge the gap.

The positive changes that are taking place within the innovation ecosystem are promising for marginalized founders. They also signal a shift towards a more equitable and prosperous future. These changes emphasize the importance of collective action in driving transformative progress.

So, this year, don’t “celebrate” women- promote them, pay them, fund them. INVEST. IN. WOMEN


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