Lana Cuthbertson (from left) of Areto Labs, Bobbie Racette of Virtual Gurus and Shelley Kuipers of The51
From Pivot Magazine

Some smart investors are focusing on women—and reaping the rewards

Female business founders end up with the smallest share of venture capital, even though they often run more successful enterprises than their male counterparts. But things are changing

Lana Cuthbertson (from left) of Areto Labs, Bobbie Racette of Virtual Gurus and Shelley Kuipers of The51Lana Cuthbertson (from left) of Areto Labs, Bobbie Racette of Virtual Gurus and Shelley Kuipers of The51 (Images provided)

When Bobbie Racette was laid off from her administration job in 2016 during Canada’s oil and gas sector crash, the Calgary-based admin assistant struggled to find work—so she set out to create a job for herself. Today, that job is Virtual Gurus, a robust and growing company with over 40 full-time employees that matches businesses across North America with virtual assistants. But as an Indigenous woman who is also part of the LGBTQ2SIA+ community, getting her business to where it is today wasn’t without its challenges.

“I had $300 in my pocket when I started,” she says. “It took two years to close [our Series A funding round], because nobody would invest in me. I went through 170 investors who said no, that we’re not scalable, even though we were pushing over a million in revenue.”

Racette isn’t the only female founder to come up against a lack of access to venture funding. Women-led startups account for approximately 17.5 per cent of all private-sector businesses in Canada, yet received 2.3 per cent of total VC funding worldwide in 2020 (down from 2.9 per cent the year prior), according to Crunchbase. And for women who also belong to other marginalized groups, that statistic is even lower. When Virtual Gurus secured $8.4 million in Series A funding, Racette became the first Indigenous woman in Canadian tech to close a Series A round of funding. Meanwhile, data shows that Black female founders receive less than 0.35 per cent of total funding dollars in the U.S.—despite being among the fastest-growing group of entrepreneurs.

And now, amid the economic slowdown in the tech sector, which is seeing mass layoffs across the board, investors are pulling back, leaving startups desperate for capital. Data firm Briefed.In reported 701 deals between Canadian tech companies and investors in 2021 for a total of $14 billion. Compare that to this past year, where investment activity fell by 41 per cent to 417 deals worth $9.7 billion—a trend forecasted to continue into 2023. This isn’t welcome news for any founder, but it leaves women in an especially challenging position.

One main, well-documented explanation: women are deemed less relatable when pitching their business venture to a group of (mostly male) investors, and face a number of gender-based biases, in part because women make up less than 20 per cent of partners at Canadian venture capital firms, according to a Diversio report.
“You invest in what looks like you,” says Shelley Kuipers, co-founder of The51, a Calgary-based venture capital firm that focuses on democratizing capital for women and gender-diverse founders. “We've had founders tell us they've changed their name so venture capitalists will return their emails. There's a lot of built-in systemic bias in the existing system.”

Rachel Bartholomew, founder of Hyivy Health, a Kitchener, Ont.-based pelvic health startup, was met with skepticism, too. She founded her company in 2020 after being diagnosed with cervical cancer. During treatment, she found herself frustrated and disheartened by the outdated (read: 84-year-old) rehab device she was handed for pelvic floor rehabilitation. She leveraged $1.7 million in government grants before tapping on the shoulders of investors, many of whom couldn’t connect with her product. Eventually, she raised $1.3 million in pre-seed funding, but doing so was no small feat.

“I do find many of the male investors we’ve had investment with connect with [our product] because their wives, sisters, daughters have gone through it and [that] can create that conversation. I think that’s where I see the biggest impact being made,” she says. “But it takes us that much longer, that many more conversations and that many more nos. And that’s a tough pill to swallow on the business side.”

However, progress is being made to give women-led businesses more opportunity to succeed. The number of female investors at VC firms is on the rise, and there are several high-profile venture capital firms, including The51 (which has backed both Hyivy Health and Virtual Gurus), working to fund and empower startups with underrepresented founders at the helm. Other examples across Canada include Backbone Angels, a team of angel investors focused on women and non-binary founders, as well as StandUp Ventures and Sandpiper Ventures, two seed-stage venture firms.

“Women are designing products and services for themselves, because they either aren't there or they really haven't been designed or developed with a woman in mind,” says Kuipers. “There's a tremendous opportunity for women to redesign, rebuild, re-engineer and re-architect the things that we are consuming every day.”

There’s data to support this, too. Over the past decade, the rate of women in entrepreneurship in Canada has increased 30 per cent. In addition, despite receiving significantly less capital, women-founded ventures often generate more revenue than their male counterparts—more than twice as much per dollar invested. A recent report by the Women Entrepreneurship Knowledge Hub (WEKH) also found that the number of new female-led startups valued at more than US$1 billion (aka “Unicorns”) has nearly doubled since 2019.

Lana Cuthbertson, co-founder and CEO of Alberta-based cyber safety startup Areto Labs, a company that counteracts online abuse and recently raised its first $1 million in equity financing, isn’t surprised.

“The expectations for us are way higher. So, by the time women are asking for a certain amount of investment at a certain valuation, it's a really good deal,” she says. “For me, it seems like a big opportunity for investors. It's a competitive advantage that's up for grabs.”


Find out why having women in C-suite roles is key to boosting an organization’s bottom line, why connections are key for Indigenous female entrepreneurs, and how women can find their voice as leaders. Read about the insights gained by three female CPAs at various stages in their careers, and learn how CPA Jenny Okonkwo drew from her own life as a newcomer and Black female accountant to raise visibility around issues affecting women in accounting and finance.