More women and visible minorities are filling the senior ranks of Canada’s venture capital firms—though junior staff have become less diverse, according to a new report from the BDC Capital.

The findings reveal a switch from previous years, in which BDC found more diversity on the first career rungs at VC firms, with representation tapering off as positions became more senior, leaving key decision-makers at Canada’s investment firms disproportionately white and male.

In its latest study, BDC Capital—the venture capital arm of the Business Development Bank of Canada—found that in 2024, women made up at least half of senior investment teams at 45 per cent of firms, up from 38 per cent a year earlier. For visible minorities, representation among senior investors rose from 40 per cent to 50 per cent. 

Among junior employees, however, the share of firms with at least half their teams made up of visible minorities dropped from 63 per cent to 41 per cent, and declined from 49 per cent to 43 per cent for women.

Paula Cruickshank, senior vice-president of fund investments at BDC Capital, said she was surprised to see the increase in senior-level diversity in 2024, which had declined the year before. She said gender and racial representation at the top of firms can have a big impact on the types of companies that get funded. “I firmly believe that if there’s women partners and women decision-makers, they’re out there looking for women-led companies,” Cruickshank said. “And women-led companies are more likely to work with firms where they see themselves represented.” 

Diversity at the top of organizations, however, could decline over time if there aren’t junior employees to fill the leadership ranks. “We want to continue to see that representation exists at all levels,” said Cruickshank. 

BDC, a federal Crown corporation, is the biggest venture capital investor in Canada, investing both directly in startups as well as a large network of venture capital funds that back individual companies. The bank has been publishing diversity and sustainability metrics from investors and their portfolio companies since 2022. This year’s results are based on survey responses from 68 VC firms and more than 550 of their portfolio companies. 

In that time, the general trend has been toward more diversity and more ambitious climate and sustainability policies. For example, the share of VC firms with at least one woman on their investment committee reached 88 per cent in 2024, up from 63 per cent in 2021, the first year for which BDC collected data. 

Representation of visible minorities on investment committees also increased, from 55 per cent to 76 per cent over the same period. And the proportion of entirely women-owned firms increased from four per cent in 2021 to nine per cent in 2024. At the portfolio level, 22 per cent of companies now have workforces that are at least half women, up from 14 per cent in 2021. 

Progress on all metrics hasn’t been linear, however. On climate change, for example, fewer investors reported having goals to reach carbon neutrality for the second year in a row. Just five per cent of firms said they have such targets in place, down from 18 per cent in 2022. Firms with environmental, social and governance (ESG) policies dropped from 78 per cent in 2022 to 71 per cent last year. However, more investors—29 per cent, up from 21 per cent—are measuring greenhouse gas emissions among their portfolio companies. 

The mixed progress on ESG in the venture capital sector mirrors moves by public-market companies. A recent report from consulting firm Millani found that while more public firms are issuing sustainability reports, disclosures have become less detailed, with some companies scaling back ESG policies.

BDC’s report cites political and market shifts for the drop in climate goals. “New Canadian greenwashing regulations are prompting some organizations to scale back climate-related disclosures,” the report says. “Meanwhile, political uncertainty and growing ESG backlash in some jurisdictions may be contributing to a more cautious approach to climate-neutrality objectives.” 

Cruickshank said the numbers speak to the complexity of addressing the climate crisis. “Getting to carbon neutrality, I think we’re all admitting, is quite challenging work,” she said, noting that “people are more likely to commit to things that they can control.”