New report on Canadian venture, private equity landscape shows firms failing when it comes to inclusion side of D&I

Women partners are six times more likely to report harassment or feel opinions not valued.

It’s the age-old story: some progress is made towards a more diverse investor class in Canada, but much more work needs to be done in order to create an equitable and inclusive landscape.

That is the core insight from a new report set to be tabled later today by the Canadian Venture Capital and Private Equity Association (CVCA) and Diversio.

Based on a Diversio survey of 413 individuals, the number of women venture capital (VC) investors has increased since 2019, but still make up less than 20 percent of all partners in Canada. In private equity (PE), that number sits much lower at around nine percent.

“What we’re trying to do here with this inclusion piece is uncover the ‘why.’”

While diversity and inclusion (D&I) have become buzzwords in recent years, the story that is less often discussed is the inclusion side of that coin. This latest report shows that investment firms might be hiring more diverse teams, but the environment they are creating has yet to become inclusive.

“Diversity on its own is not enough,” the report reads. “Research has shown that once individuals from underrepresented backgrounds enter the workplace, they are more likely to be faced with exclusion, biases, discrimination and even harassment, which make success and long-term career growth in the sector difficult.” At the partner level in VC, the report found that women are approximately six times more likely “to report harassment in the workplace or feel like their opinions are not heard or valued.”

RELATED: Tech sees progress in promoting women to executive roles, but still lags behind other sectors

They are also 3.5 times more likely to feel like no one is invested in their career growth.

These issues also permeate operational and junior investment (analysts, associates etc.) teams.

In PE, which has fewer women partners at the table, the numbers are even bleaker. According to the report, women partners are 12 times more likely to report harassment in the workplace or feel their opinions are not heard or valued compared to their male counterparts. They are also about three times more likely to feel like the person to whom they report is unfair.

“We keep hearing the ‘what’ and the ‘what’ is not changing,” said Laura McGee, founder and CEO of Diversio. “What we’re trying to do here with this inclusion piece is uncover the ‘why.’ So what’s different about the experience that is preventing us from reaching parody?”

RELATED: Diversio secures $8.13 million CAD on journey to improve corporate diversity and inclusion

In speaking with BetaKit, the Diversio CEO claimed that the number of women feeling harassed or like their voices are not valued is on par with the overall financial industry, but when compared to the overall economy, it’s above average.

“At the end of the day, you can hire a diverse set of people to be on your team [but] if you don’t do the rest of the work, it’s all in vain,” echoed CVCA CEO, Kim Furlong.

McGee noted this area of creating an inclusive environment is something that investment firms need to work on. Creating diverse teams has overall positive effects, including strong financial returns. Data has shown that companies that have more diverse teams have stronger returns, and that’s true for venture capital as well.

Inovia founder Chris Arsenault noted earlier this year that the journey his firm has been on to diversify its team over the past eight years has brought better quality deals to the table.

“Quality of the deal flow is like your starting point,“ he said. “And that quality of deal flow has increased, as our diversity has increased over the last eight years.”

“That quality of deal flow has increased, as our diversity has increased over the last eight years.”

Furlong told BetaKit that she has seen many CVCA members (which includes more than 180 firms across the country) open their eyes to the need and benefit of more diverse teams in recent years. It’s something she has seen driven, in part, by limited partners who are increasingly required to ensure their dollars are going to environmental, social, and corporate governance (ESG) initiatives.

McGee echoed that this change is being aided by portfolio companies pushing back against their investors and asking them to do more, and the general need for top-tier talent in a crowded talent market.

These efforts are reflected in the diversity of junior investment teams, which have notably more women than those in partner roles. When it comes to VC, the report states that 34.7 percent of junior investment hires are women compared to 19.4 percent at the partner level.

In PE, which has only nine percent of its partners as women, 28.1 percent of its junior investments team are female.

When it comes to intersectionality, the number of people of colour at the VC partner level is 23.2 percent; 10.3 percent of individuals self-identified as LGBTQ2+; 19 percent of individuals self-identified as having either a physical or cognitive disability. These numbers remain fairly in-line across junior VC and PE teams.

“It was interesting that the representation of racial & ethnic minorities in private capital particularly at the non-management level is greater than the Canadian demographic statistic as well as the broader financial industry average,” said Christiane Wherry, CVCA’s DEI initiatives lead and VP of research and product. “This indicates that the pipeline for diverse talent is strong and growing.”

While women in Canada only make up less than 20 percent of venture partners, that number is high when compared to the United States (US). Data collected about US venture firms in 2020 found that less than five percent of partners were women.

But while the diversity numbers are trending upwards, inclusion remains something to be addressed. Both McGee and Furlong express hope that this report is a first step in helping investment firms become more thoughtful about not only diversity but inclusion.

For the CVCA’s part, the group has implemented programs that it hopes will address the gender gap. In 2019, when the CVCA attempted to do its first D&I report but had a limited data set, the group pledged several actions “to do its part to improve diversity and inclusion in the industry.”

RELATED: Survey suggests progress, room for improvement on equitable compensation for women in venture capital

Last year, the CVCA launched a pilot internship program for Black, Indigenous, People of Colour (BIPOC) students that placed 10 BIPOC students from Canadian universities into CVCA member firms as paid interns. Of that group, one individual was offered a permanent position and two individuals were offered to extend their contract.

The group also provides a Diversity Resource Library for its members, and noted that in 2021 it recommended to the federal government to establish an inclusive growth stream to Venture Capital Catalyst Initiative (VCCI) – which was promised $50 million in the 2021 budget.

Federally-backed BDC Capital also recently launched a “standardized Diversity, Equity and Inclusion (DEI) Reporting Template” in collaboration with the CVCA.

The template is meant to help firms track data at the general partner level and in their portfolio by documenting self-disclosed gender and race data from teams, as well as details on D&I policies and practices.

“My advice for what it’s worth to investors and anyone following that industry [is to] encourage folks to look under the hood and keep collecting that data…and to do something about it,” said McGee.

Photo by on Unsplash

Meagan Simpson

Meagan Simpson

Meagan is the Senior Editor for BetaKit. A tech writer that is super proud to showcase the Canadian tech scene. Background in almost every type of journalism from sports to politics. Podcast and Harry Potter nerd, photographer and crazy cat lady.

0 replies on “New report on Canadian venture, private equity landscape shows firms failing when it comes to inclusion side of D&I”