The Business Development Bank of Canada (BDC) is launching a $500-million venture fund and lab to support Canadian women-led businesses at a time when investors tend to be discouraged from making business investments amid a looming recession and market turmoil.
The Crown corporation said the investment platform, Thrive Venture Fund and Lab for Women, is the largest of its kind aimed at overcoming the barriers faced by women entrepreneurs.
“We know that BDC will be called out to play an even greater role at a moment where investors might behave differently (and) we might see less capital available for a while,” chief executive Isabelle Hudon said.
While recognizing there will be some known and unknown headwinds coming out of the pandemic, she said investors such as BDC will need to stay close to entrepreneurs to make sure they adapt as needed.
The investment platform comprises three parts, including a $300-million direct investment fund, a $100-million lab and a $100-million indirect investment arm that will focus on companies that have at least one woman as the general partner investor.
The platform is a follow-up to BDC Capital’s Women in Technology $200-million venture fund, which launched in 2017. Out of the 38 investments made into women-led businesses, the team has exited eight companies successfully, one of which was the Montreal-based photography platform Unsplash Inc.
The new lab will focus on women-led companies that aren’t ready to receive venture-capital money but have growth potential
“We’ve seen women-led companies not being totally ready to receive venture capital and not finding investment options, which is stopping their growth because they were not able to find capital invested into their goals,” Hudon said.
The new lab, she said, will focus on women-led or co-founded companies that aren’t quite ready to receive venture-capital money but have growth potential.
Michelle Scarborough, who leads both the Women in Technology and Thrive venture funds, said there’s still a very significant gap in the Canadian marketplace when it comes to venture capital for disruptive companies led by women.
“We want to keep the envelope broad because we want to be able to serve more women with equity that they would not otherwise be able to receive,” Scarborough said, adding that the lab’s approach will be to meet the needs of companies in their very early, pre-seed stage of the market.
The two BDC venture funds are not the only ones supporting women-led businesses. For example, The51 Ventures was launched in 2020 by three Calgary women with the specific goal of harnessing the power of “financial feminism” in the agri-tech space.
Scarborough said there remains a gap in the ecosystem where there aren’t enough women in investing roles and decision-making positions in funds. The goal of the indirect investment, she said, is to give a level playing field for women seeking to access capital by changing the culture of the sector.
Hudon also pointed to data the BDC obtained that shows much more fluid and positive outcomes for women entrepreneurs and their companies when funding conversations include another woman as a general partner at the table.
New funding platform tries to bring down barriers for women entrepreneurs and investors
RBC economist Dawn Desjardins, rare woman to climb to top of male-dominated profession, calls it quits
Diverse boards tied to fewer financial ‘irregularities,’ Canadian study finds
A study released in March by the Conference Board of Canada found that raising funding from venture-capital firms is one of the key challenges women entrepreneurs face compared to men. Among the findings was that women are more likely to self-fund their business compared to men who tend to rely on angel investors, friends and family.
While investments are seeing a dip in the market, which is anticipated to get bigger, Scarborough said she finds it an excellent time to be putting money in companies and to partner alongside those entrepreneurs as they grow their businesses.
“This is a very, very exciting time and a lot of new innovations will come out of this period as well,” she said.