TORONTO — The number of businesses owned by women is on the rise in Canada, but female entrepreneurs still disproportionately face barriers such as lack of access to capital from financial institutions, according to a new study.
The Women Entrepreneurship Knowledge Hub's 2023 State of Women’s Entrepreneurship in Canada report, released Monday, suggests the proportion of majority women-owned businesses is increasing.
The study estimated 18 per cent of businesses are majority-owned by women, up from 16.8 per cent in 2020 and 15.6 per cent in 2017.
Lead researcher Wendy Cukier, the founder of Toronto Metropolitan University's Diversity Institute, said she is also encouraged that the gender gap related to early interest in entrepreneurship and innovation is shrinking.
Women entrepreneurs showed an increase in the total early-stage entrepreneurial activity (TEA) rate compared with men from 2021 to 2022, per the report (TEA is the percentage of the adult population between 18 and 64 who are either starting or running a new business). The TEA rate for women was 65 per cent of the TEA rate for men in 2021, jumping to 81 per cent of the rate for men last year.
“It’s always glass half empty or half full,” said Cukier.
“From my point of view, it could be far worse, and it would be far worse had there not been some significant investments and focus on women entrepreneurship in the last few years.”
That includes the federal government’s Women Entrepreneurship Strategy, launched in 2018, meant to increase women-owned businesses’ access to financing and expertise, through nearly $7 billion in funding.
But the report recommended further aid be provided to help women-owned businesses get off the ground and stay afloat.
It showed majority male-owned businesses have higher survival rates than majority female-owned businesses. After 10 years, around 58 per cent of female-owned businesses tend to stick around, compared with 62 per cent of male-owned businesses.
Female entrepreneurs also tend to be concentrated in service sectors, such as retail trade, knowledge-based industries, and tourism, leaving them under-represented in other, male-dominated fields, the study found.
“If you apply a gender lens to the innovation and entrepreneurship ecosystem in a very systematic way, which is what we're doing, you uncover all sorts of hidden bias, and you also create opportunities to rethink how we justify investments,” said Cukier.
“One of the key things we have to do is question some of the assumptions that have tended to shape a system that I would argue was created by men, for men.”
The report suggested those systemic biases continue to play out as women face barriers such as access to financing, whether it be in the form of loans, venture capital or angel investing.
The report also highlighted the disproportionate challenges faced by Indigenous and racialized women in the space.
It cited Statistics Canada data showing the proportion of Indigenous and diverse women entrepreneurs with intersecting identities declined between 2017 and 2020.
Both Black and Indigenous women face additional barriers when trying to access financial services, including those related to costs and lack of networking opportunities, according to the report.
It noted that immigrant women, many of whom are racialized, are half as likely to become entrepreneurs as immigrant men.
"For Black women entrepreneurs, we're faced with intersectional discrimination and biases, making it more difficult to succeed," said Nadine Spencer, CEO of the Black Business and Professional Association, which was also involved in drafting the report.
"When you look at the fact that Black women have limited access to financing, this means that our ability is limited to start and grow our business."
Spencer said she's optimistic that those in positions of power are listening to concerns about those challenges, citing Ottawa's Black Entrepreneurship Program, which allocated $265 million over four years to help Black entrepreneurs grow their businesses.
"As a Black entrepreneur, I think even myself when I started, the fact that I could speak to a mentor, I could work with the bank and even have government as part of part of my ecosystem just wasn't a thing," she said.
"When you focus on economic inclusion and providing targeted support and resources specifically to a demographic that is under-represented and underserved, it's able to give us access to some degree so we can make inroads."
This report by The Canadian Press was first published March 20, 2023.
Sammy Hudes, The Canadian Press