Ot­tawa boosts ven­ture fi­nanc­ing to fe­male-led tech com­pa­nies

The Globe and Mail (BC Edition) - - REPORT ON BUSINESS - SEAN SILCOFF

BDC fund in­creased to $70-mil­lion, in ad­di­tion to $809-mil­lion lent to fe­male-owned busi­nesses

The fed­eral gov­ern­ment is ex­pand­ing its ven­ture-cap­i­tal fund­ing to women-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 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 $20mil­lion. 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 give 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, food­ser­vice 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 seed­stage 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 pledge by BDC to in­crease term lend­ing to ma­jor­ity womenowned busi­nesses by $700-mil­lion over three years. BDC sur­passed that ob­jec­tive in 30 months and has now reached $809-mil­lion in loans.

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