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GENDER GAP: Where are all the women founders and investors?

BY BRENDA BOUW via Globe and Mail
April 29, 2013

 

Across the country, women are making strides in sectors such as financial services and in boardrooms, but little progress is being made in the entrepreneurial world. The dearth of women in startup circles represents not only fewer role models the next generation of entrepreneurs, but also lost economic opportunity for Canada, experts say.

Among women who are starting companies, few are scaling those businesses, in part because they aren’t as entrenched as men in the venture capitalists and angel investor space, where money is raised to build and grow companies.

“Where are all the women?” said Ottawa-based entrepreneur Fiona Gilligan, who has started a handful of highly profitable businesses in her career to date, and is now an angel investor. While Facebook’s Sheryl Sandberg is calling on women to ‘lean in,’ Ms. Gilligan argues what women really need is to be welcomed into the male-dominated entrepreneurial ecosystem and help to create more opportunity.

“There are a lot of financially successful women who want to invest in emerging entrepreneurs. If we aren’t invited to the table then we don’t get investment opportunities…I don’t think it’s a conspiracy by guys, I just think they don’t get how important women are,” added Ms. Giligan.

In fact, a new U.S. report shows that venture capital firms that invested in women-led companies outperformed those that didn’t. Conducted by the U.S. Small Business Administration (SBA), the study offers two possible reasons for this: Wary of investing in women-led businesses, VCs might do “more vigorous due diligence” leading to better investments. The second explanation is that “a heterogeneous management team” might perform better.

Another explanation, put forth by John Tozzi of Businessweek, may be that that if the venture capital market is an old boys club, biased against women, those that invest in women-led companies have their pick of good opportunities that others overlook.

But despite the growing body of evidence supporting the economic potential of women-led enterprises, the “entrepreneurship gap” between men and women in Canada continues to be “striking,” according to a 2012 report by TD Bank, especially given that women make up half of the work force and more than half of post-secondary students in Canadian schools.

“Women’s underrepresentation relative to men among the self-employed has seen little improvement over the past decade,” said TD deputy economist Beata Caranci in the report.

The TD report also finds that women who do branch out on their own tend to run smaller businesses and exhibit slower growth than their male counterpoints, at least in terms of revenue. Read more>>