Women Entrepreneurs Are Driving Economic Growth and Innovation Despite Persistent Challenges
4 min read · Dec 2024
Women Entrepreneurship Knowledge Hub (2023)
Canadian women entrepreneurs have shown a greater increase in total early-stage entrepreneurial activity (TEA) rate compared to men from 2021 to 2022. The TEA rate for women in 2021 was 65% of the TEA rate for men; it increased in 2022 to 81% of the rate for men.
Summary
This report explores the state of women’s entrepreneurship in Canada as of 2023 by the Women Entrepreneurship Knowledge Hub. It highlights emerging trends, challenges, and opportunities, particularly during the COVID-19 pandemic. The report underscores the growing role of women-owned businesses in driving innovation, digital transformation and their contributions to various sectors, emphasizing their resilience and adaptability during economic uncertainty.
Method
The report synthesizes data from multiple sources including the Canadian Survey on Business Conditions, the Survey on Financing and Growth of Small and Midsize Enterprises (SMEs), and the Global Entrepreneurship Monitor. Through quantitative and qualitative analyses, the report examines the state of women-owned SMEs and self-employed women, incorporating sectoral views, intersectional analysis, and ecosystem perspectives to offer a comprehensive view of women’s entrepreneurship.
Key Findings
Women-owned businesses slightly increased despite the impacts of the COVID-19 pandemic.
The proportion of majority women-owned businesses increased from 15.6% in 2017 to 16.8% in 2020.
There was a rise in the number of self-employed women, reaching 988,400 in 2022 from 975,200 in 2021.
Women entrepreneurs are narrowing the innovation gap.
Women-owned SMEs are more likely to implement marketing innovations (26.1%) compared to men-owned SMEs (9.8%).
The rate of goods and services innovation is the same for women and men, at 14.5%.
Women-owned SMEs and self-employed women are concentrated in certain sectors.
The three most common sectors for women-owned SMEs are retail trade (26.2%), professional, scientific, and technical services (20%), and accommodation and food services (17.6%).
The pandemic accelerated the adoption of digital technologies among women entrepreneurs.
Half of early-stage women entrepreneurs increased their use of digital technologies.
One-third of established women entrepreneurs also increased their use of digital tools.
Women-owned SMEs face lower survival rates compared to men-owned SMEs.
The survival rate of women-owned SMEs after 14 years is 45%, compared to 50.2% for men-owned SMEs.
Women entrepreneurs face higher challenges in accessing capital and maintaining business operations.
Takeaways
While celebrating advancements in women’s entrepreneurship, especially during times of economic uncertainty, women entrepreneurs in Canada still face significant hurdles in securing funding. Despite initiatives like the BDC’s Thrive Venture Fund, Alterna Savings and BDC’s joint loan program, BMO Celebrating Women Grant Program and others, a large funding gap remains due to systemic biases and outdated financial practices.
The persistent funding gap for women entrepreneurs highlights the urgent need for change in capital deployment. Investors and funders have the opportunity to revamp their funding criteria and selection processes, which have historically disadvantaged women, to better reflect the unique strengths of women-led businesses. This involves actively combating unconscious biases, integrating diverse perspectives into decision-making, and ensuring transparency and accountability in funding processes to build trust and fairness.
By adopting these strategies and implementing robust evaluation frameworks, capital deployers can be crucial in creating a more inclusive and equitable entrepreneurial ecosystem for women.
References
Women Entrepreneurship Knowledge Hub. 2023. “The state of women’s entrepreneurship in Canada 2023.” Women Entrepreneurship Knowledge Hub. https://wekh.ca/wp-content/uploads/2023/06/WEKH_State_of_Womens_Entrepreneurship_in_Canada_2023-X.pdf
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.
