Enabling women's access to capital

Pillar 4

Increasing women's access to capital

Over the past decade, women have started successful businesses at a significantly faster rate than in the past, and currently own 40% of private businesses (with or without employees). Studies also show that new businesses with at least one female founder outperformed their all-male counterparts over the past 10 years.

However, there are certain constraints in the flow of capital, as well as difficulty scaling businesses, that currently limit this economic potential. For this report, we interviewed over 25 leaders from a variety of financing institutions (in both Canada and the United States), representing $2 trillion of market capital, regarding issues related to women entrepreneurs’ access to capital. There is a broad recognition that capital providers have not penetrated the women entrepreneurial market as well as they have the male entrepreneurial market.

This could suggest that there are weaknesses in capital providers’ ability to find business deal flow, as well as that women owners may not be actively pursuing capital financing at the level they could. Those who we interviewed agree that if this does not change, it will ultimately become a competitive disadvantage. Both countries need to address this issue in order to achieve his full economic potential.

Need for focused action

Three stakeholders play a critical role in improving women entrepreneurs’ access to capital:
1. Capital providers;
2. Women entrepreneurs themselves; and
3. Governments.

1. Capital Providers (institutional investors, financial institutions, asset managers, pension funds, venture capital firms)

– Create and implement training protocols highlighting the potential of women-owned businesses and how best to interact with them
– Consider enterprise purpose as fundamental to strategy
– Provide support for gender-neutral succession planning
– Adopt clear, strong and relevant diversity policies
– Increase the number of women in key roles, including senior leaders, client-facing, and those that influence the investment decision
– Connect Canadian and US networks of women entrepreneurs and women executives

2. Women entrepreneurs

– Set bold goals and scale up
– Determine whether scale is a realistic objective within current business
– Re-evaluate risk tolerance for leverage
– Consider benefits of partnership, joint ventures or other forms of collaboration to achieve scale
– Build out a holistic and clear business plan that links economic and social
– Recognize and source more sophisticated capital earlier on in the life cycle of the business

3. Public Policy and the Role of Government

– Implement Canadian tax Incentives to stimulate women entrepreneurship
– Private leaders should invest alongside governments
– Give preferred access to government tender processes

Date Posted: May, 2018