The Opportunity to Bridge Diversity and Inclusion Gaps in the Canadian Venture Capital Ecosystem
4 min read · Jan 2025
BDC (2022)
Only 4% of GPs are fully women-owned, while nearly 40% have all-male investment committees.
Summary
This report provides a comprehensive overview of the state of diversity, equity, and inclusion (DEI) in the Canadian venture capital (VC) industry. It highlights the lack of diversity in senior roles, challenges in retaining diverse employees, and the need for stronger DEI practices throughout the investment process. Additionally, the findings show limited diversity within portfolio companies, emphasizing the importance of general partners (GPs) playing a more active role in promoting DEI within their investments.
Method
This study is based on data collected through a comprehensive survey sent to 71 GPs and their 1,115 portfolio companies. While an 80% response rate from GPs was achieved, participation from portfolio companies was lower at 49%, which was attributed to uncertainty about the purpose of the data collection. The report utilized self-reported data, allowing participants to voluntarily disclose information about their gender, race, ethnicity, and other relevant characteristics.
Key Findings
Despite progress in junior roles, diversity remains lacking in senior investment positions within Canadian venture capital firms.
While over 90% of GPs have at least one female team member, only 64% have female representation in leadership positions.
While 43% of GPs have at least 50% women representation at the junior investment level, this figure drops to only 11% at the senior level.
Diversity is lacking in both GP ownership and investment committee composition.
Only 4% of GPs are owned entirely by women, while 42% are owned entirely by men.
Close to 40% of GPs have an investment committee composed entirely of males.
While GPs are making efforts to increase diversity in their teams, retaining diverse talent remains a challenge.
49% of GPs hired at least 50% women in 2021.
72% of GPs whose promotions included at least 50% women during the same year.
Despite efforts to increase diversity, 48% of GPs reported that half of their employee departures were women.
Takeaways
BDC Capital's analysis provides valuable insights into the state of diversity, equity and inclusion within the Canadian VC ecosystem, while also identifying key opportunities to enhance data collection practices. With an 80% response rate among general partners, the survey highlights a strong recognition of DEI’s importance across the industry. However, gaps remain, particularly in engaging portfolio companies. The concerns around data privacy and the personal nature of certain questions, such as those related to sexual orientation and veteran status, may have hindered participation.
BDC Capital's commitment to ongoing DEI initiatives, including collaborations with industry partners and policy template development, marks significant progress. Future efforts should focus on building trust, raising awareness and reinforcing the importance of DEI data. This is crucial, as it will enable measurable change and provide essential benchmarking to track progress and set future goals for a more inclusive Canadian VC ecosystem.
References
Business Development Bank of Canada (BDC). 2022. “Diversity, equity and inclusion metrics for BDC Capital’s portfolio.” https://www.bdc.ca/en/articles-tools/blog/diversity-equity-inclusion-metrics-for-bdc-capital-portfolio.
About WIN-VC Canada:
New Power Labs is the research lead of the Women and Nonbinary (W) Impact (I) Network (N) for Venture Capital (VC), a national collaborative of organizations working to provide services, programming, events, and dedicated resources to women and non-binary entrepreneurs and gender lens investors across Canada who are working towards becoming investment ready and increasing the pool of investors driven to invest in these ventures.
This research is part of WIN-VC Canada, supported by the Government of Canada. WIN-VC acknowledges the support of Innovation, Science and Economic Development (ISED). ISED has awarded funding for WIN-VC that will make the venture capital environment more inclusive for women by transforming traditional investment processes, processes and knowledge into respectful and meaningful approaches that value equity and impact with a focus on diverse women and non-binary entrepreneurs and SMEs including Black communities, Indigenous peoples, racialized populations, persons with a disability, 2SLGBTQ2+ and new Canadians.
