All partners in the business ecosystem, including government, need to work together to achieve a successful outcome for women entrepreneurs.
Women entrepreneurs contribute billions of dollars to the Canadian economy and to the communities where they live. Our recent study Everywhere, Everyday Innovating: Women Entrepreneurs and Innovation (sponsored by BMO, Government of Canada, Carleton University and the Beacon Agency) examines how and where women are innovating in Canada. We crossed the country interviewing 146 entrepreneurs in all sectors and regions, ranging from start-ups to multimillion-dollar businesses. We heard incredible stories of ingenuity, passion, resilience, desire to grow and (often) frustration in dealing with financial institutions and investors. We also heard about the lack of women-friendly incubators, accelerators, hubs, grants and inclusion in existing business networks.
The study is a follow-up to A Force to Reckon With: Women, Entrepreneurship and Risk, released in 2016. That study debunked the myth that women entrepreneurs were risk-averse and described their approach instead as “risk-rational.” We know that women entrepreneurs take a holistic approach to risk. We also know that they focus on the implications of their decisions for the long-term sustainability of their businesses. This long-term view of growth is very compatible with the need to constantly innovate to achieve desired results.
It is readily apparent to us that women entrepreneurs are innovating everywhere, everyday, across Canada. Their innovation is not limited to products but ranges across all aspects of their businesses, including innovations in marketing and services and how they lead their companies. Yet their achievements are often under-recognized because the lexicon of innovation in Canada equates innovation with advances in technology. Narrowing the scope to technology is inconsistent with the well-recognized and much broader definition of innovation by the OECD, echoed in the work of Canada 2020. As a consequence, women entrepreneurs are often not eligible for grants, which tend to have criteria more suited to advances in technology; nor are their contributions widely recognized.
Women entrepreneurs are using technology and adapting it to their needs, but many of their innovations fall outside this sphere. The majority of women-owned businesses are located in the services sector and struggle to obtain funding for start-up and growth. Financial institutions and venture capitalists are slow to recognize the value imbedded in these businesses. Indigenous women are also innovating and face similar challenges, plus those arising from prejudice, lack of support from family and community, and a shortage of training opportunities.
Budget 2018 was the first complete gender-conscious budget — despite Canada having preached to other countries for years on the importance of applying gender analysis to budgets. Along with a number of initiatives aimed at advancing equality, it announced a strategy for supporting women entrepreneurs. Many of our report’s recommendations were acknowledged in this strategy, starting with $1.4 billion given to the Business Development Bank of Canada (BDC) for loans to women entrepreneurs. This commitment is in addition to an increase to $200 million (from $70 million) for investments in women-led technology firms over five years, through the BDC’s Women in Technology Fund. This separation of funds is significant, as it recognizes that women entrepreneurs need funding in all sectors to attain maximum growth potential. The strategy also acknowledges that there are regional differences, and it increases funding for regional development agencies to help strengthen opportunities for women entrepreneurs. Women entrepreneurs are increasingly entering the agriculture sector, and this trend is supported by a proposed new lending product through Farm Credit Canada. Additionally, Canada’s Venture Capitalist Catalyst Initiative includes a “comprehensive focus on enhancing diversity and addressing gender balance among VC fund managers and portfolio companies.”
Statistics are an important element of evidence-based policy. At the present time, there is a lack of key statistics disaggregated for women and diversity groups, including women entrepreneurs. As a consequence, it is difficult to measure the success of policies and programs. Budget 2018 recognizes the need for better analytic tools and statistics, which would provide the deeper knowledge necessary to move the dial for women entrepreneurs. Reforms and new programs to increase their representation must be backed up by the appropriate measurement tools. We were not able to uncover any statistics indicating the ratio of men and women accessing current grant programs.
In addition to an emphasis on gender equality, Budget 2018 includes measures to improve access to federal innovation programs in order to increase participation of underrepresented groups, which currently include women. For this initiative to be truly successful, the definition of innovation used by the government in assessing grants and new programs needs to be much broader than the current narrow focus on technology. Yes, we want women entrepreneurs to feel comfortable in the tech space and take advantage of the incredible opportunities, but we also want to recognize women entrepreneurs’ innovations in all sectors.
Women entrepreneurs face challenges in accessing global markets. A global outlook is essential to Canada’s competitiveness and to businesses’ ability to grow, and funding of $250 million over three years to Export Development Canada to “provide financing and insurance solutions for women-owned and women-led businesses that are exporting or looking to begin exporting” will greatly assist our access to global markets.
But Budget 2018 only lays out a pathway for advancing women entrepreneurs. This is not enough. Implementation will be key, as will gathering statistics and feedback to assess what is working and what needs to change. Government cannot make these changes alone. It needs partners. Financial institutions should play a critical role in changing their practices to support women entrepreneurs. All partners in the business ecosystem need to work together to achieve a successful outcome for women entrepreneurs.
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