Less than half of Canada’s most active venture capital firms are tracking the number of investments they make in companies founded by women. 

A survey of the country’s 17 most active venture capital firms, conducted for The Logic by the Canadian Venture Capital and Private Equity Association (CVCA), found that eight keep track of gender-based metrics, of which seven confirmed to The Logic they track their investments in women founders. One began tracking the metric in 2012, one started tracking in 2014, three in 2017, one in 2019 and one this year. The eighth, Inovia Capital, did not disclose when it started tracking, but is the only firm whose limited partner requires it to track the gender diversity of its portfolio; the others do so voluntarily.

Three of the 17 firms—Yaletown, Westcap and New Brunswick Innovation Foundation—did not respond to The Logic’s questions. 

In 2019, when The Logic asked Canada’s 18 most active VC firms whether they track investments in women-founded companies, only one—BDC Capital—disclosed that it did. 

Data on VC funding consistently shows that companies founded by men receive an order of magnitude more money than women-founded companies. The Logic’s 2019 analysis of publicly disclosed deals over the previous five years estimated that nearly 90 per cent venture capital investments in Canada went to companies exclusively founded by men. In the U.S., the share of VC dollars in startups founded exclusively by women increased from 2.2 per cent in 2018 to 2.7 per cent a year later. 

Sarah Kaplan, director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Business, said all firms need to be tracking their investments, and should think about setting targets if they’re serious about closing the gender gap in VC funding. “You can’t make progress if you don’t track,” said Kaplan. “If they’re not measuring it, it’s going to be much harder for them to know how they’re doing, to see if they’re making progress and to hold themselves accountable.” 

Most of the VC firms surveyed for this article said supporting women-founded companies was important to them. Several firms that don’t track gender in their investments emphasized that they still value gender diversity in their portfolios. 

Kaplan notes that while many firms may have good intentions, supporting a greater diversity of founders doesn’t happen organically. “Investments are so skewed by gender bias that women-led or founded businesses are getting overlooked on a regular basis.” Not only does that disadvantage woman founders, investors miss out on potentially lucrative deals, too, she said.

Kaplan suggests putting targets in place to address the problem. “A lot of people say, ‘That’s going to compromise quality,’ but actually, what it does is increase search to find those businesses that might not have access to your network—maybe your friend didn’t give you a recommendation to have a coffee chat with one of these people, so you just have to look harder.”

Real Ventures started tracking how many women-founded companies it finances about six years ago, after noticing the dearth of women in its portfolio and the industry at large. “There was a realization that we need to be much more proactive about finding women and supporting them,” said Janet Bannister, managing partner at the firm. “Not only is it the right thing to do, but also, when you look at the stats that show diverse teams are high-performing teams, we said if we want to deliver the best results, we need to be thinking about diversity.” Bannister said Real funds companies it believes will ultimately return the most value to investors, regardless of the founders’ gender. But she said her mentorship of woman entrepreneurs and standards the firm now has for evaluating companies have helped increase representation in their portfolio: 42 per cent of companies in the firm’s latest fund, from which it’s been investing since 2017, have at least one woman founder, and 48 per cent of the dollars from that fund are invested in women-founded companies. Those investments are outperforming Real’s companies founded exclusively by men, generating 71 per cent of the portfolio’s total value, said Bannister. 

There are myriad factors keeping VC dollars from women, from the low number of women partners at firms to gendered discrepancies in how investors vet entrepreneurs. But if firms know where they stand—and disclose that information for the sake of accountability—they can begin setting protocols for improving representation, said Kaplan. 

Here’s a deeper look at how Canadian VC firms are looking at the gender diversity of their portfolios. The list is arranged in order of most to least active firms from 2015 through 2019. 

BDC Capital

The Crown corporation has been tracking investments in women-led companies since 2017. “Supporting women entrepreneurs is a priority for BDC,” said Tara Wood, a spokesperson for the firm. “We want to be able to demonstrate how we support women and lead by example so others can follow.” For BDC to consider a company woman-led, it needs to have at least one woman founder, CEO or executive; the last of which must have been in the role for at least a year. “We do not limit our investment to founders because our goal is to remove barriers to entry and provide as many opportunities for all types of women of tech,” said Wood. BDC was the only firm surveyed that has targets for financing women-led companies. 

Real Ventures

Real has been tracking women founders in its portfolio since about 2014. Gender diversity in its portfolio has increased since then, according to Bannister, despite the firm not setting targets for financing women entrepreneurs. Bannister said the standards Real has put in place for evaluating companies that pitch the firm have helped it distribute close to half of its recent fund to women-founded companies. She also points to her mentorship in women-focused incubators—like Communitech’s Fierce Founders, which is backed by BDC, and the Women Founders Accelerator program at Ryerson University’s DMZ—for exposing the firm to promising female entrepreneurs. 

Cycle Capital Management

The Montreal-based firm, which focuses on impact investing, has been tracking its funding in women-led companies since 2012, the longest of any VC firm surveyed. Last year, it signed on to the Billion Dollar Fund for Women (since rebranded to Beyond The Billion), a global initiative to increase funding for firms founded and led by women. Cycle was founded by Andrée-Lise Méthot, now one of three women among the firm’s six partners. Cycle does not have gender-based targets for its investing. 

Fonds de solidarité FTQ

The Montreal-based firm does not track its financing for women-founded companies, but Patrick McQuilken, a spokesperson for the firm, said it plans to make changes that “will allow us to track such data.” 

Inovia Capital

Inovia is the only firm whose LP requires it to track the gender diversity of its investments. The firm, which has offices in Montreal, Toronto, Calgary, San Francisco and London, did not respond to questions about when it started tracking or whether it has gender-based targets for its portfolio companies. 

MaRS IAF

The Ontario-based VC firm doesn’t formally track investments across its portfolio. However, it partnered with BDC to launch a women-focused fund called StandUp Ventures in 2017, which tracks women-led companies, defined as startups with a woman founder or C-suite executive who has at least as much equity as any man on the founding team. On Thursday, StandUp announced the final close of its first fund, bringing it to more than $21 million, up from its $15-million target. The fund has so far committed an undisclosed sum to nine women-led startups. Apart from StandUp, MaRS IAF does not have its own targets for investments in companies founded or led by women.

Innovacorp

The Halifax-based Crown corporation started tracking the gender diversity of its portfolio this year. “There were no investments made in women-founded companies in 2019,” said a spokesperson for the firm. “We are in the process of implementing a tracking system for women-founded companies. It will be something we are mindful of moving forward.” Innovacorp doesn’t have gender-based targets in place, but said, “We’d certainly love to see more women-founded or women-led companies in our portfolio.”

Relay Ventures

The Toronto-based firm—which is an investor in The Logic—did not disclose whether it tracks the number of women-founded or -led companies in its portfolio, or if it sets gender-based targets for it. However, Megan Laycock, a spokesperson for the firm, said, “We recognize the importance and value of women entrepreneurs and understanding that there is a systemic issue in the tech industry.” She pointed to Relay’s partnership with Disruption Ventures, a fund exclusively for companies founded and led by women. The partnership “includes investment, resources and access to our network,” said Laycock. Disruption Ventures, which was launched in May 2018 by Elaine Kunda, has a $30-million fundraising target; so far, it’s participated in one deal, investing an undisclosed amount in San Francisco-based home-rental startup Hostfully.

Panache Ventures

The firm, which has offices in Montreal, Toronto, Calgary and Vancouver, began tracking its portfolio’s gender diversity in 2017. “We are interested in understanding what our portfolio looks like from a [diversity and inclusion] perspective,” said spokesperson Tim Kwok. The firm does not set gender-based targets for its investments, and Kwok said it hasn’t noticed any changes in the number of women-founded companies in which it invests since it started tracking. “We plan on investing in the best companies across Canada regardless of founder/co-founder gender.”

iGan Partners

The healthtech-focused firm did not confirm whether it formally tracks the number of women-founded companies it invests in, but disclosed that of the 20 deals in which it participated in 2019, one involved a company with a woman founder. The firm did not specify whether it has gender-based targets for its portfolio.

Fondaction CSN

The Montreal-based fund does not track its investments in women-founded companies specifically, but does track those in women-led companies, which it defines as those with at least one woman who is a shareholder and has a leadership role in the company. “The definition we use for women-led companies reflects the fact that if a women holds both a shareholder position and a leadership [role] in a company, her chances are increased to become a majority shareholder when the company is being transferred,” said spokesperson Julie Cailliau. The fund does not have gender-based targets for its investing activity.

Lumira Ventures

The firm, which funds health-care ventures in Canada and the U.S., does not track its investments in women-founded companies. It disclosed that it made six investments in 2019, one of which went to a woman-founded company. Lumira did not specify whether it sets gender-diversity targets for its portfolio.

EDC Equity

The equity arm of Export Development Canada has been tracking its financing for women since 2019. That year, the Ottawa-based firm launched its Women in Trade Investments Program, which has earmarked $100 million in growth equity directly for scaling businesses founded or led by women, and to women-led venture capital funds “demonstrating a commitment to promoting gender equity on both sides of the investment table,” said Shelley MacLean, a spokesperson for the firm. EDC did not specify whether it has targets for investing in women-led companies.  

OMERS Ventures

The venture capital branch of the pension plan has been tracking investments in women-led companies since around 2017. “We are figuring out how we act on that information to the benefit of our fund and our portfolio,” said OMERS spokesperson Jennifer Janson. The firm didn’t specify whether it sets targets for gender diversity in its portfolio. “We certainly don’t have all the answers, but because we genuinely believe a more diverse team leads to a more successful fund, we want to figure out a meaningful way to measure that goes beyond simply ticking a box,” said Janson.