Bridging the Finance Gap for Women Entrepreneurs

12. Canada: Policy insights on financial literacy

Dr. Barbara Orser
Telfer School of Management, University of Ottawa

Dr. Kanwal Bokhari
Haskayne School of Business, University of Calgary

Dr. Tasha Richard
Department of Business & Social Sciences, Dalhousie University

Background

Women entrepreneurs make significant contributions to Canadian prosperity through business start-up and growth. In 2024, the Canadian Labour Force Survey reported that majority women-owned businesses, including self-employed workers, accounted for 19.6% of all private sector businesses (Tam, Soo and Johnston, 2024[1]). Compared to men, however, women are significantly less likely to own and manage employer small- and medium-sized enterprises (defined as firms employing 1 to 499 people and generating over CDN 30 000 in gross revenue). In 2020, among employer SMEs, 16.8% were majority women-owned firms, 68.9% were majority men-owned firms and 14.3% were equally owned by men and women (ISED, 2022[2]). The Global Entrepreneurship Monitor in Canada reports that in 2022, 18.3% of men and 14.8% of women engaged in early-stage entrepreneurial activity (Gregson and Saunders, 2023[3]).

Gender differences in firm survival rates, experience and labour market productivity underscore the value of gender-based analysis of finance, entrepreneurship education and small business training programmes. Between 2005 and 2019, majority men-owned businesses showed slightly higher survival rates compared to majority women-owned businesses (ISED, 2022[4]). Principal owners of men-owned enterprise are, on average, more likely to have prior industry experience than their women counterparts (Grekou, 2020[5]). This is important because prior industry experience is positively correlated with firm revenues, number of employees and labour productivity (Grekou and Watt, 2021[6]). Financial management experience is associated with access to capital that is critical for firm survival and growth (Nitani, Riding and Orser, 2020[7]). Women entrepreneurs report less financial management experience and less financial knowledge compared to men, where men achieve higher scores on tests of small business financial knowledge than women (Orser and Riding, 2020[8]). Enhancing human capital while addressing structural barriers that stymie women entrepreneurs’ access to capital remains a challenge.

To bolster women entrepreneurs’ human capital and access to financial capital, economic development organisations, education and training institutes, and lenders offer a myriad of small business finance courses. In Canada, for example, there are over 200 business accelerators and incubators that support entrepreneurs (ISED, 2022[9]). Most programmes do not acknowledge gender influences in experience, financial decision-making or structural barriers that impede women entrepreneurs’ access to and use of capital. Few support train-the-trainer programmes to integrate insights about gender and gendered entrepreneurial ecosystems within programming (Orser, Elliott and Cukier, 2019[10]). Women are also less likely to engage with accelerator programmes compared to men (Maxheimer and Nicholls-Nixon, 2022[11]).

At the same time, women-focused small business programmes have proliferated in entrepreneurial ecosystems (e.g. bootcamps, micro-lending programmes, investment funds, angel networks). Programming is funded in part through the federal Women Entrepreneurship Strategy (WES) Ecosystem Fund. The federal government invested CAD 100 million over five years to strengthen capacity within the entrepreneurship ecosystem and close gaps in services for women entrepreneurs. An additional CAD 65 million was provided to the WES Ecosystem Fund in 2021 (ISED, 2022[12]). The strategy focuses on individuals (e.g. mentoring, training, loans) versus interventions to address structural inequalities, injustices and biases (Richard, 2025[13]). To date, there is no federal policy to inform WES programming, adjudicate training proposals, or link provincial education and federal economic and education mandates (Orser, 2023[14]). This risks resulting in reinventing curricula, amplifying stereotypes, and limiting awareness of evidence-based insights about gender differences among Canadian entrepreneurs, particularly with respect to small business finance. Considering early exposure to entrepreneurship at the university level, the Business Development Bank of Canada (BDC) (BDC, 2023[15]) concludes:

"The education system often falls short in preparing students for the realities of entrepreneurship, failing to expose them to essential skills. This lack of expertise impacts not only their confidence to start a new company but also their ability to nurture an existing one, creating a growing gap between entrepreneurial intent and success."

Policy issue: Financial literacy programmes

Few education, training or investment organisations adopt a gender lens in demand- or supply-side financial literacy programming. Businesses created by women often differ from those created by men (Nitani and Nusrat, 2023[16]) in terms of firm size, sector engagement, amounts and sources of inaugural capital, and founders’ growth expectations. Hence, women encounter more and greater challenges in accessing external finance for entrepreneurship. From the demand side, majority women-owned businesses are less likely to request debt financing (Statistics Canada, 2022[17]) and receive smaller amounts of financing across bank loans, leases, trade credit and government funding (Nitani and Nusrat, 2023[16]). When seeking equity capital, women-led businesses are less likely to attract angel investment and venture capital, garnering a mere 4% of venture capital funds earmarked for high-risk, high-reward businesses (ISED, 2022[12]).

From the supply side, investment decisions are made within a context of gender disparity within capital markets. In debt markets, while women occupy 49% of middle management positions in Canada’s six largest banks, they retain only 39% of senior management roles (CBA, 2022[18]). In equity markets, women comprise 37% of angel organisation members (NACO, 2023[19]). Among venture capital firms, women hold only less than 20% of partner positions (CVCA, 2021[20]). The under-representation of women angel investors and venture capitalists compounds the already challenging Canadian equity investment landscape, particularly for investments under CAD 5 million, characterised by a scarcity of angel and venture capital (Nitani and Nusrat, 2023[16]).

Illustrative exceptions aimed at addressing this scarcity are SheBoot and the Financial Feminism Investing Lab. SheBoot is a bootcamp that prepares women founders to pitch their business and secure investment capital. Founded by Capital Angel Network and Invest Ottawa, this national non-profit organisation helps scale technology and grow technology-enabled women-led businesses. Launched with government support in 2021 by the Haskayne School of Business, University of Calgary and The51 (a venture capital firm that invests in women-led and gender-diverse businesses), the Financial Feminism Investing Lab prepares women to become angel investors and venture capitalists, capable of evaluating risks and devising strategies to invest in start-ups. More recently, the crown corporation BDC introduced THRIVE lab, advancing CAD 100 million to equity and equity-like investments and training support for at least 100 women-led businesses (BDC, 2023[21]). These programmes demonstrate the merits of partner-based programming led by experienced trainers who understand gender influences and structural biases in capital markets. Although such programmes are commendable, some concerns have been raised that women entrepreneurs and investors are over-mentored and under-funded. There remains the need to introduce policies to address structural barriers in capital markets and within entrepreneurship education and small business training programmes.

Conclusions

Canada’s entrepreneurial landscape presents a compelling juxtaposition. Internationally, Canada is lauded for the Feminist International Assistance Policy. Yet, domestic policies that require gender-based analysis of government-funded capital market initiatives and entrepreneurship/small business education and training are largely absent. While there has been an increase in programmes to support women entrepreneurs, there are no policies to mandate gender-based evaluation of accessibility and effectiveness. The current approach of the Women Entrepreneurship Strategy leans heavily on an individualistic approach rooted in the liberal feminist standpoint (Richard, 2025[13]). Policy should now focus on broader structural inequalities and biases that women entrepreneurs face (Orser, 2022[22]). It is also time to gather data and draw upon innovative approaches to uncover the intersectional and compounded disadvantages that women entrepreneurs face (Bokhari, 2022[23]). Targeted policies are necessary to close knowledge and capital market gaps, boost the participation of women entrepreneurs and investors, and enhance firm survival and growth. This requires the Government of Canada to move beyond ad hoc programming to constructing a national policy framework that supports gender-based analysis of finance and entrepreneurship programming including funding, design, delivery, content and evaluation criteria.

References

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[1] Tam, S., S. Soo and C. Johnston (2024), Analysis on majority women-owned businesses, first quarter of 2024, Statistics Canada, Ottawa, https://www150.statcan.gc.ca/n1/en/pub/11-621-m/11-621-m2024001-eng.pdf?st=wCZKZbei (accessed on 27 September 2024).