It’s well known that there is a gender gap in the venture capital (VC) industry—especially in the US—but not much has been done to change that. Earlier this year, Ellen Pao’s gender discrimination lawsuit against Kleiner Perkins Caufield & Byers brought the issue to the forefront—everyone was talking about gender disparity in the venture capital world and what it’s like to be a woman in the industry. Regardless of the final verdict, the case spurred other women in venture capital to speak out about their experiences, and it forced venture capital firms to realize that it’s something they need to rectify—it wouldn’t go ignored much longer.

The Canadian venture capital industry is much younger and smaller than that of the US, and we can’t really make a direct comparison between the two. However, the gender gap in the industry is very much visible even in Canada. In 2013, MaRS Data Catalyst took a first look at gender representation in Canada’s venture capital industry and answered the first of two key questions:

  1. How many women are in investment decision-making roles in Canadian venture capital firms?
  2. Do Canadian venture capital firms with women in investment roles invest more frequently in women-led or women-founded startups?

This year, we conducted follow-up research to help us get an answer to the second question, and also get at the reason behind the disparity on both the investment and entrepreneur side.

How we did it
We first refreshed the original list from 2013 (venture capital firms that made early-stage investments from 2009–2013). These parameters ensured we were looking at firms that were actively investing in growing companies at the time. We used CrowdFlower—an online crowdsourcing platform for microtasks—to conduct this refresh, following the same method used in 2013 (identifying executives’ roles and gender via the company website for the venture capital firms identified). In addition to identifying the employees at the firm, we also checked the VC firms’ website for their investment portfolio.

Once we identified a list of the companies in the available portfolios, we enlisted an Upwork contractor to identify roles and gender of individuals on the management/leadership team of each company via the company website.

Since the limited data does not offer us much insight into the reason(s) behind gender disparity in the venture capital industry and why so few women entrepreneurs raise venture capital, we interviewed four senior executives at venture capital firms in Canada to get their views on the current landscape.

Kerri Golden, Michelle McBane, Shirley Speakman, Janet Bannister

Kerri Golden—CFO at Information Venture Partners
Michelle McBane—Investment Director, MaRS IAF
Shirley Speakman—Partner, Cycle Capital Management
Janet Bannister—General Partner, Real Ventures


MaRS Infographic: Where are the women venture capitalists in Canada?
View the infographic.

Why are there so few women in venture capital in Canada?

Our research shows that [inlinetweet prefix=”.@MaRSDD Report:” tweeter=”@MaRSDD” suffix=””]women occupy only about 12.5% of investment roles in Canadian VC firms[/inlinetweet] we looked at—eight of whom are at the partner level, compared to 93 men. However, there are twice as many female partners now, compared to two years ago when we conducted our initial research. Will we see more women move up the ladder at VC firms in Canada?

Short answer: Not necessarily, but there is hope.

“There just aren’t that many jobs in venture capital,” explains Golden, echoed by McBane, Bannister and Speakman. “There are actually fewer firms now than when I started” and “it’s an industry thing, before it’s a gender thing.” This appears to be the primary challenge in the venture capital industry in Canada: “There are fewer funds (compared to the US for example), and a much smaller pool of capital.”

Not only are there limited funds hiring in venture capital, but private equity appears to be a more lucrative sector for women investors in Canada. There are “far more women in private equity (and banking),” confirm Speakman and McBane. For one, there are more hedge funds and more opportunities to grow.

But gender bias is still a factor. The venture capital community is still very much an “old boys’ club”—the few firms that are hiring tend to be smaller teams of one to two men, and it’s “hard to create a culture where you’re choosing people from the outside.” Odds are, they hire from this somewhat exclusive group. The high representation of women in other parts of private equity probably adds to the draw away from the venture capital industry. The private equity community presents more opportunities to build a reputation, a well-established network, as evidenced by Canadian Women in Private Equity (CWPE)—no such committee exists for the Canadian venture capital industry.

The upside? We’re seeing more women pursuing entrepreneurship in Canada. For example, last year’s MaRS clients survey found that 33% of respondents in the information and communications technology (ICT) and health sectors in Ontario had one or more women on their leadership team. The numbers may still be low, but we should also acknowledge that there has been an improvement over the past 10 years: “The needle has definitely moved; there’s generally a lot more women,” agrees McBane.

Majority women-owned small and medium-sized enterprises represented over $117 billion per annum of economic activity in Canada in 2011

Not only are there more women entrepreneurs, but there’s also a more widespread recognition that companies with women founders or co-founders more often than not outperform those without. The benefits of this are twofold—it’s a step in the right direction to have more women-founded companies attracting and receiving venture capital funding, but it may also contribute to the other side of the table.

All four senior executives we interviewed didn’t intentionally pursue a career in the venture capital industry. Another thing they have in common is that they all worked closely with startups in varying capacities—from founder to consultant—before they became venture capitalists. “Having gone through the ups and downs yourselves, it gives you greater credibility with an entrepreneur,” confirms Golden. Speakman also suggests to “go out and build a track record—get into a young startup and make it successful; get into another one and learn from your failures.”

Once you’ve built that profile, and established yourself as a leader in your field, “people will come find you to be a venture partner” and you work your way up from there. Again, this is not limited to women—anyone in a junior role would be expected to go out and build entrepreneurial experience before being considered for a more senior position at any venture capital firm.

Companies with female founders and women in investment roles

How many women-founded ventures are successfully raising venture capital?

In our dataset, not a whole lot. Of 600 companies that raised venture capital, 31 (5.2%) had a woman founder. Of those 31 companies, only one company received an investment from two or more VC firms on our list (they may have received investments from firms not on our original list), compared to 70 companies with an all-male founding team that did.

While this was not a criterion of any sort, all of our interviewees have at least one company in their current portfolio with a woman on the founding team. We sought to find out what it is that made these companies successful in raising venture capital, and how more female entrepreneurs can do the same.

There was unanimous agreement that, above all else, they need to have the fundamentals: “If you want VC, you need a VC-grade idea—are you solving a real pain-problem?” and “work on your pitch, is the idea a fit for our fund?” Realize “your business may not fit around your current lifestyle, there is almost always a trade-off” and “swing for the fences.” While some [of our interviewees] are more aware of, and keep an eye out for, women-led ventures more so than male investors on the team, gender rarely plays a role in investment decisions. In more than one instance, women-founded companies were everyone’s first pick across the board, for teams largely consisting of male investors.

Will more women investors lead to more women-founded companies getting funded?

Most companies that get VC funding are founded by men. The majority of our interviewees agreed that this could not be dismissed as being a byproduct of certain industries. Investors at VC firms are predominantly male, so are their direct networks, and so are the events and gatherings where they get their trusted deal flow—it’s a hard cycle to break.

While the final decision is based on your mettle and the potential of your business idea, “there is a grain of truth to the thought that it (having women on the team) attracts good opportunities, through self-selection.” Speakman is referring to a company in Cycle Capital’s portfolio founded by two women who may not have sought VC funding if it weren’t for the two women on the investment team. McBane agrees that having more women investors not only encourages women entrepreneurs to approach the firm, but it also affects the little things—you build a different relationship outside of the pre-existing cliques in the VC industry, and you invest in those you have a connection with.

In our dataset, we found that of 39 VC firms, 17 invested in companies with a woman on the founding team. Seven of these firms have a woman on their investment team; these seven firms also invested in male-founded ventures. We found no VC firms that had only invested in female-founded ventures, but we did find that 32 firms on the list invested exclusively in companies with an all-male founding team, and of those, only three have a woman on their investment team. This supports statements made by our interviewees and suggests there is a benefit to having more women investors on board.

Next steps
Our data simply confirms that while the industry is slowly changing, we have a ways to go in terms of having higher representation of women on either side of the table—and there are a few different things we could do to start seeing that change.

Are women-only venture capital firms the way to go?

In the US, we’re seeing more women entrepreneurs and venture capitalists go out and start their own firms to fund women-led ventures. While this is a step in the right direction, and definitely helps more women-led ventures gain exposure, Speakman is wary that the Canadian VC market is still too small for this to be a viable solution. Others agreed that this may eventually have the same effects as having an all-male team—you don’t end up with diversity in many regards, and you need that for good investment decisions.

Graphic: Correlation between having a woman on the investmetn team and the likelihood of investing in a female-founded company

What can investors do to increase the number of women-led ventures that raise funding?

“Fish in a different pond.” Investors need to consciously recognize that they’re missing out on opportunities simply because they don’t look beyond their closed network. Identify great female entrepreneurs and “create your own pond,” suggests Speakman. It doesn’t necessarily need to be a push to invest only in women-led companies, but you need to bring awareness to the fact that the current team has no one looking out for those opportunities.

The few female investors in the industry could also act as mentors to entrepreneurs/individuals interested in the VC industry—men and women alike. Raising awareness that there are women in these positions whom you can turn to for advice can be hugely beneficial, similar to how our interviewees act as mentors to some companies at MaRS, and others.

What can female entrepreneurs do to achieve a higher success rate with venture capital?

First off, “you need to be sure that venture capital is right for you,” suggests Bannister. It’s a partnership—both sides need to be sure that it’s a right fit for them. Having done that, you need to be unfazed by the “old boys’ club” barrier. Know your business through and through; the pain-point that your business solves needs to come through clearly, regardless of the gender of the person sitting across from you.

You need to build good relationships. Generally speaking, you can’t be an introvert. You need to be out there looking for potential mentors and investors and insert yourself into the VC networks.

To overcome the limitations in the VC industry, “[inlinetweet prefix=”.@MaRSDD Report:” tweeter=”@MaRSDD” suffix=””]women have to be fearless, and they have to be more fearless than men[/inlinetweet],” states McBane.

What can others in the entrepreneurship space do to tip the scales?

MaRS, and other innovation centres in the Ontario Network of Entrepreneurs (ONE), must continue to facilitate those connections, says Speakman. “An important element of what MaRS does is the curated deal flow that I have access to, that I pass on to other investors.” They’re in a position to help identify those great women-led ventures, and help them make the strategic connections they need to grow their business.

We also need to consciously make an effort to highlight the success of women-led ventures and put them in the spotlight where investors can’t turn a blind eye toward the overwhelming data on female founders being as good as, if not outperforming, their male counterparts.

Golden jokes that VC events are the only place where there’s no line for the women’s washroom—the representation of women at these events is dismal. Organizations need to intentionally increase the number of women invited to speak at and attend these events, and we need to call them out when they don’t. Some argue that by aiming for an equal ratio, you might give up on quality of speakers/attendees. But you cannot claim to put the best of the best in the room, and a single woman didn’t make the cut, when there are many examples of leaders in the industry today.

Where do we go from here

If the past few years are any indication, we will start to see more women-led companies successfully raising venture capital. In the meantime, there are women who are creating alternative solutions for female founders seeking funding—Vicki Saunders’ Radical Generosity program and Katherine Hague’s Female Funders initiative are likely only the beginning of many more to come.

An important reflection that arose in our discussion with the venture capitalists is that while the gender gap needs to be addressed, and is something that we need to improve, there’s a bigger conversation to be had about diversity—not just gender, but racial, ethnic and more—in the venture capital industry.


The following should be taken into consideration before making any direct comparisons to existing datasets/information about the number of women in venture capital firms and how many women-led ventures get funded:

  • All data is accurate as of March 1, 2015.
  • Since not all firms disclose their portfolio for various reasons, and some firms have since become inactive, there are 39 venture capital firms on our list—six fewer than the original list of venture capital firms used in 2013.
  • Where applicable, we looked only at their current portfolio, and not exits or prior rounds. We also cannot assume that in all cases the investments listed on the website comprise the entire portfolio of a firm.
  • Of the companies found in the 39 firms’ portfolios, there were 600 currently active companies that listed their employee/founder data on their website. The final list of companies therefore doesn’t account for companies in a VC firm’s portfolio that are no longer active, or companies that are currently active but have no details about their team on their website.
  • Infographic note: The figure, “Majority women-owned small and medium-sized enterprises represented over $117 billion per annum of economic activity in Canada in 2011,” is from Action Strategies to Support Women’s Enterprise Development. (2011). Telfer School of Management, University of Ottawa.