A new report from the Canadian Venture Capital and Private Equity Association (CVCA) and BDC Capital offers more detail on what we already know about the state of diversity in Canada’s investment community.
The report, based on the responses of 300 VC firms and corporate venture arms across Canada, found that 18 percent of those surveyed in VC firms identify as visible minorities. For private equity firms, that representation fell to just six percent. Of those that participated, 12 percent of partners in private equity firms were female, and 11 percent were female in VC firms.
Of 23 private equity firms surveyed, seven had more than 30 percent entry-level or junior employees who were visible minorities. Only two out of the 23 had more than 30 percent of their non-partner managers as visible minorities. Of the 36 VC firms, nine had more than 30 percent of their entry-level or junior employees and non-manager partners as visible minorities.
Of the 300 VC firms and corporate venture arms surveyed, only 11 percent of partners were female. 18 percent of employees identified as visible minorities.
The report also found that firms with one or more women partners raise funds that are, on average, 66 percent the size of those raised by firms with all-male partners. This is certainly not news to Canada’s investment ecosystem. A report released last month from Female Funders and Highline Beta found the number of VC dollars invested in Canada in 2018 by women-led funds decreased, with 85 percent of all limited partner dollars invested being in funds with no women managing partners. The CVCA report found $4.6 billion was invested in active Canadian funds with no women partners.
The lack of women presence is also not limited to venture capital. A report released by Minerva BC in January found that just one-quarter of board members in companies surveyed were women. Women also accounted for just 23 percent of available executive positions among those companies surveyed.
The CVCA and BDC Capital said there is a “clear opportunity to boost representation” across visible minorities and women in Canada’s investment community. The report found private equity firms trail the Canadian banking and legal professions in visible minority representation, with members of minority groups holding 15 percent and nine percent respectively of senior management positions.
Of the firms asked if they have policies or practices in place to ensure all employees are treated fairly, private equity and VC firms saw 65 percent and 83 percent, respectively, responding ‘Yes’.
“Those who reported having practices in place listed inclusive leadership training and inclusive talent systems, which are known to have a higher impact than leading with employee resource groups or simply hiring more women,” the report said. “Inclusive diversity is not only the right thing to do, it is the financially strategic thing to do.”
These findings could suggest that firms have awoken to the realities of representation across Canadian investment firms. Even though the vast majority still lack diverse staffing and leadership, many could be attempting to take the first steps in resolving that.
“Diversity in leadership is proven to create more value for investors, more value for consumers, and support economic growth,” said Michelle Scarborough, managing director of strategic investments at BDC Capital. “By investing in strong teams and companies that lead by example, we accelerate the growth of their business, drive competitiveness, and ultimately create large companies that spur a new culture of diversity and inclusion that sits at the foundation for any good business culture.”
Image courtesy CVCA and BDC Capital