Data from the Global Entrepreneurship Monitor confirms that Canadian women are making strong contributions to the growth of an entrepreneurial economy, with some of the highest levels of female activity among innovation-driven economies.
However, there is still a significant financing gap. In Canada, women receive less than four per cent of venture capital financing. We need to change this.
With the addition of new financing options, including equity crowdfunding, there is an opportunity to change and address a gap that was identified by the Expert Panel on Championing and Mentorship for Women Entrepreneurs. This expert panel identified there is very little capital in Canada available to help high-risk enterprises with high growth potential, stating “[t]hese companies are often looking to transition from medium to large, but can’t find traditional sources of financing.”
Equity crowdfunding fills this gap by providing a new source of financing, which reduces the traditional barriers for both women entrepreneurs and investors. Offering an open, transparent method of raising funds, platforms such as FrontFundr provide a way to reach and engage a broader audience of investors. For investors, online investment opportunities provide access to a greater variety of deals in an approachable format.
The result is an enhanced community of support through which entrepreneurs can grow and thrive, and through which investors can make an impact and realize a return.
Several positive results are occurring.
First, we are seeing an increase in the number of female investors. Women tend to contribute to companies with a social impact. They typically also want time to assess each company from the comfort of their home or office, which an online platform makes possible.
Second, we are seeing an increase in the number of female entrepreneurs. Women entrepreneurs now represent 47 per cent of small and medium-sized enterprises (SMEs) in Canada, according to Key Small Business Statistics, 2015.
Women entrepreneurs tend to seek slower, sustainable growth. BMO Bank of Montreal’s Report on Canadian Entrepreneurs revealed that 63 per cent of female entrepreneurs turned a profit by the two year mark, belying the common notion that most small businesses fail within their first few years of operation. “Canadian women-owned firms tend to be more profitable as a percent of sales than male-owned firms” (Women’s Entrepreneurship in BC & Canada, 2014). The result is that women led businesses make good investments.
Kevin O’Leary of Dragon’s Den fame states that, “[m]ost of my investments are with women. I’ve been working with women for 10 years. I’ve made much more money with entrepreneur women than men.” Companies run by women represent 55 per cent of his investment portfolio, but 100 per cent of his earnings. O’Leary indicates that women tend to “take less risk, be more goal oriented in terms of setting targets and meeting them.”
A recent Forbes article stated, “it is clear that crowdfunding is leading the way in changing the trend of the male-dominated world of finance and that is to be welcomed and celebrated”. If we can help more women-led businesses reach their full potential, just think how powerful the impact will be for Canada.
Together we can make a difference. FrontFundr is committed to empowering both women investors and supporting women-led businesses. Visit Pitch Place to learn how you can start investing in some women-led ventures and help to build the Canadian economy.