(Article source: The Hill Times)

The world economy is facing unprecedented crisis due to COVID-19, impacting entrepreneurs and firms across every sector. Women founders (defined as all entrepreneurs who identify as female), face unique challenges. Critical but fragile, nascent gains made by women founders and funders at significant risk of being eroded by the global pandemic.

The Government of Canada created the first-ever women entrepreneurship strategy last year, which aims to double the number of female-owned businesses in Canada by 2025. But without targeted action to ensure that women-led firms thrive in the face of COVID-19, this goal will not be realized. Women-owned companies are less likely to survive given the significant hurdles they face. Worse, we risk threatening Canada’s long-term economic growth and global competitiveness.

According to a 2019 BDC study, women account for 28 per cent of all entrepreneurs in Canada. On average, these founders earn 58 per cent less than their male counterparts; and own just 48 cents in equity for every dollar male founders own.  Moreover, less than 16 per cent of Canada’s SMEs are majority women-owned. This is a fragile foundation on which to build while navigating a global health pandemic and economic crisis.

By advancing women’s economic empowerment, Canada can add $150-billion in incremental GDP by 2026, and capture new global markets and revenues that build our national economy.

“Research shows that gender diversity, a culture founded on inclusion and belonging, are proven multipliers to corporate performance, profitability and economic growth.” 

Today, however, many women entrepreneurs are falling through the cracks, unable to capitalize on several COVID-19 support programs. This is often attributed to:

  • Business structure: female entrepreneurs are more likely to be solo entrepreneurs, or self-employed without employees, but with sub-contractors; this excludes them from some support programs, such as the Canada Emergency Wage Subsidy
  • Discomfort with loans: many are reluctant to take on debt and opt for personal capital and may not necessarily want to access something like the Canada Emergency Business Account
  • Self-Identification in tech: with only 25 per cent of entrepreneurs in the technology sector identifying as women, many of these founders will disqualify themselves from related programs even if they lead a “tech-enabled” firm

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These challenges are further compounded by the new reality that many women entrepreneurs find themselves in: simultaneously juggling even greater responsibility across home, family and work, managing childcare and homeschooling.

[highlight] In Canada, 24 per cent of women small business owners have children under the age of 18.[/highlight]

Without new investment models, the funding gap for women entrepreneurs will also increase. According to Crunchbase’s 2019 Diversity Report, only three per cent of venture capital went to firms led by a female founder. It will take more women making investment decisions to help move this dial. Today, women represent just 17 per cent of angel investors in Canada, and 13.5 per cent of Venture Capital Partners.

Introducing SheBoot

In the nation’s capital, Invest Ottawa and the Capital Angel Network are addressing this challenge head on. They have joined forces to create SheBoot, a bootcamp that helps women founders pitch their business and land investment. They have secured $100,000 from local women angels, creating new seed funding at a time when many private investors are slowing or suspending activity.

Women-led ventures perform better over time

BCG found that women-led ventures performed better over time, generating 10 per cent more in cumulative revenue over a five-year period.  However, as they are less likely to use VC’s, they are unable to capitalize on matching funding from financial institutions. New investment approaches are critical to helping women overcome significant investment hurdles if we are to rebuild a thriving economy.

But it will take more than investment to get there. It is imperative to create networks that accelerate business growth. [highlight]A study by EY indicates that women entrepreneurs who use peer-to-peer networks, mentorship programs, and associations facilitate greater access to expertise, capital and new markets. Now that we are physical distancing, it takes more time and effort to build relationships beyond our usual circles. The longer the pandemic persists, the greater the risk to women entrepreneurs and the resource-strapped networks that support them.[/highlight]

There is a silver lining as we adjust to our new normal. There has never been a greater opportunity to establish innovative models that optimize growth and success through an inclusive lens. This includes more flexible work environments; greater work life harmony that balances business and parenting; and new types and sources of funding. Founders, firms and investors around the world are pivoting to future proof their business. The time to harness the potential for women-owned firms and the Canadian economy is now. We can begin by creating new:

  • Inclusive funding and grants: creating a grant for women entrepreneurs taking on additional caregiving responsibilities while leading a business.
  • Ecosystem support: leveraging established networks that serve women founders as trusted delivery agents for new funding and programs.
  • Investment and financing models: establishing a balanced funding approach with new tax incentives for private investors to invest for equity alongside financial institutions offering debt financing.
  • Education and leadership: offering targeted support to companies that implement strategic initiatives to attract, develop, retain, and elevate women leaders from every walk of life.

As we emerge from this global crisis, it is critical to ensure women entrepreneurs are poised to thrive. Canada’s future economic success and competitiveness depends on it.

Source: Hill Times

Jill Earthy is CEO of the Women’s Enterprise Centre of BC; Eli Fathi is a serial tech entrepreneur and the CEO of MindBridge Ai; Jennifer Francis is chair of the Capital Angel Network; and Sonya Shorey is the vice-president of strategy, marketing and communications at Invest Ottawa and Bayview Yards.

 

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