According to the The Women Entrepreneurship Knowledge Hub (WEKH), there were roughly 1.35 million small-to-medium sized enterprises (SMEs) in Canada heading into 2024. Of those, roughly 18 percent were majority owned by women.
On the one hand, these figures indicate that there’s been positive growth in the percentage of female-driven businesses operating in Canada. Only 15.6 percent of total SMEs logged in 2017 were women-led, while the figure jumped to 16.8 percent as of 2020, according to the latest Survey on Financing and Growth of Small and Medium Enterprises, before reaching today’s new high-water mark.
On the other hand, being a female or minority entrepreneur doesn’t seem to have gotten any easier. While the biggest disparity and takeaway from these broad numbers is quick to draw—the status quo dictates that more than 80 percent of businesses in Canada are male-led as a rule—there are more subtle highlights from the latest WEKH research that warrant attention.
Throughout the WEKH’s 2024 report, it’s regularly noted that only 4 percent of venture capital funding in Canada goes to women-led businesses. At the same time, this demographic regularly receives fewer rounds of financing and less funding per round than their male-led industry peers.
In this blog, we’ll break down some of the key facts and figures around female and minority entrepreneurship in Canada and the resources available to help teams increase their competitive advantage and fund their growth.
The financial opportunity of female entrepreneurs
Before listing where the Canadian tech ecosystem has fallen behind in supporting female founders, it’s worth cheerleading what a global leader the country has become compared to peer nations in driving diversified entrepreneurship.
For starters, Canada consistently ranks among the top countries globally on women
entrepreneurship indices, specifically related to government policies and programs, funding and business support organizations.
As such, reporting from the Canadian government and WEKH research found that Canadian women were more engaged in total early-stage entrepreneurial activities compared to the global average in 2022 (14.8 percent vs 10.1 percent)—though female entrepreneurs still lagged behind Canadian men (14.8 percent vs 18.3 percent).
Getting granular, the stark difference in funding access for female entrepreneurs versus male counterparts lies (in part) in the different kinds of businesses and industries these two groups are most commonly involved in—or viewed from some perspectives, granted access to.
The researchers found that In 2021, for instance, women-owned SMEs were mostly active in professional technical services (16.9 percent), retail trade (10.8 percent) and accommodation and food services (6.8 percent). Men-owned SMEs, however, were focused in the industrial sector, including construction (18.5 percent) and transportation and warehousing (10.7 percent).
While there’s a lot to slice and dice, recent VC funding trends support that the industry as a whole has been more focused on the industrial sector and AI technologies in the recent past—arenas that categorically lack a strong female presence.
Much of this is of course rooted in bias—both from market leaders and the government—in “gatekeeping” access to certain sectors. When diving into some of the advantages that female-led businesses have over male-driven enterprises, it becomes clear that this gatekeeping is a big mistake:
- When women-owned SMEs adopt “an intensive export strategy,” they regularly achieve a relatively higher financial return when compared to men-owned SMEs.
- International trade in women-owned SMEs is also sector-specific; exports are higher in service-based industries where women entrepreneurs have higher representation.
- Bonus bona-fide: Immigrant women-owned SMEs export almost twice as much as SMEs owned by Canadian-born women.
Even bigger challenges, opportunities for Indigenous and 2SLGBTQ+ entrepreneurs
The WEKH’s report also dug into the key obstacles and potential facing minority entrepreneurs in Canada to unpack solutions and strategies to growth.
One eye-opening stat was that 23.2 percent of Indigenous business owners are women, which is noticeably higher than the percentage of non-Indigenous female business owners (19.5 percent) operating in Canada.
Indigenous female founders share the top challenge (funding) when it comes to running a business with their non-Indigenous counterparts. However, the struggles around a lack of financing is compounded further for this group by a lack of savings, insufficient credit history, aversion to debt, strict eligibility criteria, difficulty navigating the lending process and challenges understanding taxation.
Similar obstacles face Canada’s queer community in achieving growth for their startups. Canada’s 2SLGBTQ+ Chamber of Commerce estimates that more than 100,000 businesses in Canada are owned and operated by 2SLGBTQ+ individuals, generating more than $22 billion in economic activity and employing roughly 435,000.
As you may suspect, acquiring funding or financing was the top concern cited in the WEKH report among 2SLGBTQ+ respondents (41 percent) along with an inability to access mentorship or coaching (33%), difficulty or discrimination when acquiring suppliers (23%) as well as difficulty in networking within their sector (21%).
Public and private sector policy changes to drive more equitable entrepreneurship
To both combat these disadvantages and broaden the business opportunity for female and minority entrepreneurs, the WEKH has been a champion of policy measures aimed specifically at addressing supply-side barriers. This includes advocating for targeted funding sources for women entrepreneurs and initiatives that help reshape the entrepreneurial ecosystem to be more inclusive.
One such program is Canada’s Women Entrepreneurship Strategy (WES), which was launched in 2018 to increase women-owned businesses’ access to the financing, networks and expertise they need to start up, scale up and access new markets. The strategy hinges on three pillars, including:
- Improving access to financing through targeted loans and more recently a venture capital initiative aimed at building a more inclusive venture capital (VC) environment for women entrepreneurs in Canada
- Strengthening the ecosystem by investing in intermediaries to provide targeted support to women including financial literacy, mentoring, training etc.;
- The Women Entrepreneurship Knowledge Hub (WEKH) a national network that leads research on women’s entrepreneurship, shares best practices among women business support organizations and reports on the progress of women entrepreneurs in Canada.
Along with initiatives like WES, there are also government funding programs that innovative Canadian founders from almost any background can take advantage of to achieve the growth they deserve.
Canada’s Scientific Research & Experimental Development (SR&ED) tax credit program, for instance, offers a way for businesses at any stage—and within almost any sector—to recoup a major share of their product development costs associated with unique research and development.
For founders that are challenged when it comes to securing venture capital, private equity, or any other source of funding, tapping into innovation tax credits like SR&ED can be pivotal to helping extend their operational runway, develop stronger products, and achieve growth without losing control of their business.
At Boast, we’ve worked with hundreds of founders across North America to drive stronger R&D that strengthens their business while unlocking access to key sources of capital. To learn how we can help your business growth, talk to an expert today.
Diversity in Tech FAQ
- What is the current state of women’s entrepreneurship in Canada? As of 2024, almost 18% of small-to-medium sized enterprises (SMEs) in Canada are majority-owned by women, up from 15.6% in 2017. However, only 4% of venture capital funding goes to women-led businesses, and they typically receive fewer rounds of financing and less funding per round than male-led businesses.
- How does Canada compare globally in supporting women entrepreneurs? Canada consistently ranks among the top countries globally for women’s entrepreneurship, particularly in government policies, programs, funding, and business support organizations. Canadian women are more engaged in early-stage entrepreneurial activities (14.8%) compared to the global average (10.1%), though still behind Canadian men (18.3%).
- What are the key challenges facing minority entrepreneurs in Canada? Indigenous and 2SLGBTQ+ entrepreneurs face additional challenges beyond funding, including lack of savings, insufficient credit history, difficulty navigating lending processes, and discrimination. For 2SLGBTQ+ business owners, top concerns include acquiring funding (41%), accessing mentorship (33%), and discrimination when acquiring suppliers (23%).
- What advantages do women-led businesses have? Women-owned SMEs that adopt intensive export strategies often achieve higher financial returns compared to men-owned SMEs. They also show higher export rates in service-based industries. Notably, immigrant women-owned SMEs export almost twice as much as those owned by Canadian-born women.
- What initiatives are in place to support diverse entrepreneurship in Canada? The Women Entrepreneurship Strategy (WES) aims to increase access to financing, networks, and expertise for women-owned businesses. It includes targeted loans, a venture capital initiative, and support for intermediaries providing financial literacy and mentoring. Additionally, the Scientific Research & Experimental Development (SR&ED) tax credit program offers a way for businesses of all backgrounds to recoup a significant portion of their R&D costs.
