Investing in equality

Thousands of Canadians have come together to put their money behind their words when it comes to gender equality.

They’re not supporting political parties aimed at increased parity, necessarily. Rather, they’re investing in women, or more specifically women-led Canadian companies. Many see themselves as "financial feminists."

"We call ourselves a ‘financial feminist’ platform," says Shelley Kuipers, co-founder and co-CEO of The51.

The Calgary-based investment collective is aiming to bring together mostly women to invest venture capital in promising, innovative businesses in agri-tech, clean-tech, health care and other fast-growing sectors — all led by women.

"What that means is we’re trying to create a community and a financial platform to advance financial feminism because we believe financial equality is the last frontier of feminism."

Despite it being 2021, and gender equality having been a goal for a very long time, the fact ‘financial feminism’ is a relatively unheard-of term speaks volumes about how far the world has come regarding women’s equality or, more pointedly, how much further it must still go until women enjoy true equal economic footing with men.

After all, if money is a metric of empowerment, then it illustrates both the challenges and progress women have made regarding equality.

In most developed nations, women make up about 51 per cent of the population (slightly less than that in Canada), and yet women only make up about one-fifth or less of senior-level management in Canadian companies, a report by Osler found last year. As well, data from Statistics Canada show Canadian women on average still earn about 69 cents for every dollar that men earn. Women also earn less than men in the realms of business and finance, though the figure is slightly higher at 74 cents.

But Kuipers and other female veterans of the industry note the statistics are much more revealing when it comes to women-founded companies and investment in these businesses. Globally, fast-growing companies headed by women only receive three per cent of all venture capital investment, according to Pitchbook.com. That’s despite these companies often outperforming male-led firms by about 60 per cent, it found.

"Change is occurring… in Europe," says Barbara Stewart, a CFA (chartered financial analyst) charter-holder, and expert on women’s finance and investment issues at Rich Thinking.

She notes in Sweden about 22 per cent of partners are women in venture capital companies, which generally fund up-and-coming innovative, fast-growing businesses. While that may not seem very impressive, four years earlier, hardly any women were involved in venture capital in the Scandinavian nation, she adds.

In Canada, Stewart says about "18 to 20 per cent — if we’re lucky — of the partners (at venture capital firms) are women."

The fact only a small percentage of venture capital goes to women-led companies globally reveals financial feminism still has a way to go, says Stewart, who travels the world consulting with women-led businesses and organizations supporting financial feminism.

That’s a figure The51 aims to change. Since its founding around a kitchen table in a Calgary home less than two years ago, it has garnered an investment community of more than 7,000, mostly women (and some men). It has invested more than $6 million in women-led businesses. Now The51 has launched its Ventures Fund 1, aiming to grow its investor base and invest millions more in women-led companies, involved in early-stage innovation.

"We don’t invest in companies that say, ‘Hey, I’ve hired a woman to the board! We’re now a diverse team,’" says Kuipers about the fund, which is open to Manitoba investors. "Our premise is that there is an overperforming asset class that is underinvested in."

To that end, compared to male-led firms, women-led start-up enterprises are higher-performing, generate revenues earlier, and are extremely capital-efficient.

"Yet there is very little capital going to them," she adds.

Both she and Stewart believe the appetite to invest in these companies is growing, particularly among women.

The time is right, in short.

While the investment industry has long been a male-dominated realm, it has been transforming over the last two decades with more women working in the industry and more investing in stocks and other investments, including exempt markets (not listed on stock exchanges).

The investment industry, of course, has taken note of the potential of women investors, says Alana Riley, senior vice-president for Western Canada at IG Wealth Management.

"By 2026, women will control, for the first time, over 50 per cent of the wealth in Canada."

Additionally, nine in 10 women will become the full financial decision-makers in their household because they will often outlive their male partners.

"The core issue here is not that women are less engaged" in finances, says Riley who heads up IG’s women, wealth and well-being initiatives.

Rather, their goals and attitudes to money and investing tend to differ from men, which means the industry must craft its services more toward their needs, she adds.

"Women tend to be more focused on goals and outcomes, and men tend to focus more on portfolio performance."

Women’s take on investment risk also often differs. They have typically been more risk-averse, but that too is changing, Stewart notes.

‘The gender gap in that respect has been closing." She points to Gallup survey data from the U.S. showing historically 60 per cent of men invested in stocks versus 40 per cent of women, which is a rough way to measure appetite for risk.

But the last survey from 2019 shows 58 per cent of men are invested in equities versus 52 per cent of women.

"What’s also really exciting is that… online trading has picked up enormously."

Stewart points to a December survey in the Financial Times showing women have been signing up for online trading at faster rates than men since the start of the pandemic.

Again, Europe is ahead of the curve with women’s stock investment communities springing up on social media.

"These communities have really made them confident and way more knowledgeable," Stewart says.

That is a goal of The51 as well.

"We’re trying to make Canada a leader in investing in women’s capital and entrepreneurship," Kuipers says. "And so, what The51 wants to do is take an asset class that is a little more exclusive and make it something that is more democratized."