Canada’s focus on funding innovation in the predominantly male tech sector is putting female businesses in other industries – at a disadvantage, a report to be released on Wednesday concludes.

The report, sponsored by the Canadian government and Bank of Montreal, says female entrepreneurs lead 50 per cent of all new businesses, own close to half of all small and medium-sized Canadian enterprises and create more jobs than male entrepreneurs. Female-led businesses also have higher survival rates than those led by men. Because 90 per cent are focused on the service sector and the vast majority of tech companies are led by men or male-dominated teams, “women entrepreneurs are seen as less innovative and benefit less from funding opportunities that are concentrated for innovation in high technology,” states the report, based on interviews with 146 entrepreneurs across Canada.

“In sum, it seems like the very definition of innovation – as understood by policy and decision makers in Canada – prevents women from accessing recognition and funding for their innovations.”

BMO senior vice-president Susan Brown said: “There is this assumption in Canada that innovation happens primarily in the technology sector … that really discounts a lot of the work women do in terms of innovation in their businesses.”

The report offers 37 recommendations for governments, financial institutions and female entrepreneurs themselves. They include calling on government for better-designed, publicly funded programs and policies for – and designed by – women; improved strategies by banks to increase lending to female-led enterprises; and encouraging women to strengthen their relationships with banks and to seek more export opportunities. The report also highlights the plight of Indigenous female entrepreneurs, who face additional challenges including prejudice and lack of role models.

It comes two weeks before a federal budget in which the government, which has made empowering women a priority, is expected to expand support for female entrepreneurs.

“This study shows us what women already know to be true: that there is much more that we all must do to support women entrepreneurs and business owners,” Small Business Minister Bardish Chagger said.

“Canada needs a co-ordinated, national strategy to help women entrepreneurs succeed and fulfill their true economic potential” by helping to create “stronger support networks, more co-ordinated investments and greater access to capital to take their businesses to the next level.”

The report, titled Everywhere, Every Day Innovating and co-authored by the Beacon Agency and Carleton University, takes a different tack from past initiatives including Canada’s Move the Dial Initiative and Babson College’s Diana Project in the United States, which highlighted and argued for a reversal of the systemic lack of venture financing for female-led tech entrepreneurs and the underrepresentation of women on management teams and boards of tech companies and among the ranks of venture capitalists.

Instead, it pushes the notion of “inclusive innovation.” The report argues that small, non-tech-focused female-led businesses in a range of sectors – typically discounted by venture capitalists as “lifestyle businesses” with limited growth potential – are innovative in ways that deserve to be recognized as much as breakthrough inventions commercialized by a tech company.

“I have been saying quite a lot that the definition of innovation is pretty narrow,” said Canadian tech entrepreneur and Dragons’ Den Next Gen Den star Nicole Verkindt, one of the women interviewed for the study. “It’s important for people to feel innovation is something you can grasp. You don’t need to be an inventor or a scientist” to be an innovator.

Régine Paquette, co-owner of two Victoire Boutique women’s fashion stores in Ottawa and Toronto and one of the women interviewed for the study, says she and her business partner have made “small and significant” innovations in how they run their business. They have created a flexible and fulfilling work environment for employees tailored to their personal preferences, resulting in lower turnover, and collaborated with rival boutiques in her area “to support each other … everyone feels, if we work together, that means one less purchase at a big box store and we all benefit.” In their 14 years in business, they have struggled to access bank financing or draw more than marginal salaries, choosing to sell locally made Canadian products “even though we knew we’d make more if we sold cheap and cheerful products.”

Study co-author Clare Beckton, executive director of the Carleton University Centre for Women in Politics and Public Leadership, said “when you look at value and you look at some of what the women entrepreneurs are doing, you have value to community, value to society, how you make your country a better place for business, [for] people to live, and that’s very important in attracting other businesses to come to the country as well.”

But Canadian entrepreneur and Dragons’ Den star Michele Romanow, who was not involved in the study but read an advance draft, cautioned that while “it’s important to be inclusive,” it’s also important to continue pushing for more women to pursue a STEM (science, technology, engineering and math) education and to increase female representation in the tech sector. “We have to look where the growth is at this time and place in history,” she said, pointing to such global giants as Apple Inc., Google parent Alphabet Inc. and Facebook Inc., now among the world’s most valuable companies. “I actually think women can contribute a lot to technology and technology matters a lot to the economy,” she said. “Technology will define us for the next century as resources did in the last century. You can’t leave that out and women can make an enormous contribution to the technology environment.”

Ms. Beckton said: “We do want to see more women in tech and in senior leadership roles … we’re not saying you shouldn’t do that, we’re just saying you shouldn’t put the value solely on fast growth…we need companies that are growing fast, we need companies that are growing a little slower and [are] more sustainable.”

When it comes to raising venture capital, a number of younger female entrepreneurs interviewed for the study shared their experiences with sexual harassment. The investors they meet with are often men, which they said can place them in a more vulnerable position.

SEAN SILCOFF
The Globe and Mail, February 14, 2018