How Investors Can Help Close the Gender Funding Gap

Here’s a statement that is, somehow, as true today as it was 50 years ago: It’s very difficult for women entrepreneurs in Canada to fund their empires. Despite owning 21 per cent of businesses in Canada, female-identifying founders earn less than 4 per cent of the venture capital awarded nationally each year. As the Women Entrepreneurship Knowledge Hub asserts, the gender gap in the sector remains “considerable.”

Sarah Willson, MMIE’18, has some ideas for what to do about it. Willson is Principal at Panache Ventures, a seed-stage venture capital fund that provides funding to tech startups across the country. Today, 25 per cent of the firm’s investments are in companies run by women, ranging from space tech to sustainable textiles to hormone testing.

Willson’s expertise spans both science and entrepreneurship. She studied neuroscience and psychology at the University of Guelph and later enrolled in the Smith Master of Management Innovation & Entrepreneurship program, where she launched Hive, an automated platform that connects parents with last-minute, vetted childcare.

A natural connector, Willson’s entrepreneurial network eventually led her to the Creative Destruction Lab (CDL), where she played a key role in building out the team’s thesis on ethical AI deployment — work that informs her investment work today. It’s also where she met Panache general partner and CDL mentor Prashant Matta, which set the stage for her joining the firm in early 2021.

Today, Willson spends her days talking to founders in a diverse range of sectors, researching the ins and outs of emerging markets and working with startups in the Panache portfolio. As she explains to Smith Business Insight contributor Deborah Aarts, her work not only gives her a direct insight into the real needs of entrepreneurs, but also a uniquely informed perspective on why the gender funding gap endures — and what needs to happen to close it.

Your work isn’t explicitly focused on gender equity, but you’ve become a very active voice in the women’s entrepreneurial ecosystem, speaking, mentoring and generally hyping up female founders. Is it fair to call it a passion?

Absolutely, it’s definitely a passion of mine. Supporting women entrepreneurs is incredibly important to me, especially because — while there’s been great momentum in advocating for gender equity and initiatives that highlight the value of investing in women — there’s a need for real change that goes beyond policy.

I believe that to truly make a difference we need to tackle the systemic issues that lead to male founders receiving the majority of funding. I also think that this change won’t just happen by waiting for the right people to show up; it’s about being intentional in creating and nurturing diverse pipelines.

Do you think quotas or targets would help?

I do think we need to put certain structures in place to change the status quo, but it has to go beyond setting benchmarks or quotas. There has to be a different mindset, one based on the question, ‘How can I make sure I’m giving women entrepreneurs the same opportunities that are being given to men?’

We need more firms to understand there is real value in investing in women entrepreneurs. It’s not something companies should be doing just because they have a policy to do so. We haven’t put 25 per cent of our capital into women-owned businesses because that was our quota. We invested in these companies, as with all of our portfolio companies, because we believe they are building incredible businesses that will drive massive industry transformation and generate significant returns for the firm.

What does that kind of pipeline-building look like, practically?

To put it plainly, if you want to invest in more women then you should probably be taking more intro calls with women. I think the challenge is not a quota issue but a pipeline one. There are incredible programs empowering women entrepreneurs — attend their demo days, participate in networking events and step up as a mentor. By actively immersing yourself in these spaces you can significantly expand your network and range of promising investment opportunities, which will ensure your firm taps into the full spectrum of talent and innovation.

Can you share some examples of how being out in the ecosystem has worked for you?

One example is my role as a mentor with an incredible program for women entrepreneurs called The Forum. That exposure has led us to evaluate several investment opportunities that otherwise would not have been on our radar.

Another example that I’m really proud of is the story behind our recent investment into Perceptive Space. I have spent the last few years optimizing an outbound system, with one of its core competencies being to notify our team whenever founders update their LinkedIn bios with phrases like “building something new” or “building in stealth.”  Padmashri Suresh, the founder of Perceptive Space, came up in one of these alerts. Though I didn’t know her, had no mutual connections and wasn’t yet aware of what she was building, her impressive background — a PhD in Space Systems and experience working at NASA — stood out. So, I reached out and asked for a meeting.

On our first call, I learned that Padmashri was building software that provides space weather forecasting using a combination of sensor fusion and AI. I was immediately taken aback by Padmashri’s industry expertise and vision to transform the future of safe space exploration. I knew after our first call that I wanted to work with her. Leading Perceptive Space’s $3.9 million pre-seed round last year has been the highlight of my venture career so far. 

Venture capital is a high-risk, high reward space, and women have a reputation — perhaps an undeserved one — for being more cautious in business. Do you think this affects the numbers we see?

I haven’t found that women entrepreneurs are inherently less comfortable with risk than men. My experience has been that when you do the work of intentionally talking to and evaluating more women entrepreneurs, you will have no problem finding women who are extremely ambitious.