Happy Hump Day {{first_name | Toaster}} 🐪 ,

This week, the federal government announced $173.7 million in new funding for Canada's Women Entrepreneurship Strategy (WES), extending support for loans, mentorship, training, research, and ecosystem-building programs for women founders across the country.

We shared this news within our Toast Community, and here were some of the comments from the discussion:

If the government is investing millions into women entrepreneurs, doesn't that help solve the funding gap? To a degree, yes. But government funding doesn't replace the venture capital ecosystem; it exists because the venture capital ecosystem isn't funding women equitably in the first place. WES can help women navigate the gap, but doesn't necessarily close it.

Women own just 17.8% of small and medium-sized businesses in Canada, and Women founders receive only about 4% of venture capital funding in Canada, despite representing a much larger share of entrepreneurs. It’s like applying for a job where 96% of opportunities were effectively going somewhere else before you even entered the room.

We often talk about entrepreneurship as a meritocracy - the best idea wins and the most brilliant founder succeeds. But the inequity lies in the distribution of capital. One large study of business success found that access to financing before launch was one of the strongest predictors of future company growth and success. Funding = success.

Women aren't getting funded because venture capital doesn't primarily fund the best ideas; it funds pattern recognition. Investors are trained to look for founders who resemble those who have already delivered outsized returns. The problem is that the founders who built the biggest venture-backed companies over the last 40 years have overwhelmingly been men.

When an investor says they're looking for a "proven founder profile," they're often describing one built on decades of male success stories. Then a woman walks into the room with a different career path, a different network, a different leadership style, and a company serving a market that investors may know less about. Suddenly, the founder feels "riskier” even if the business isn’t.

Research has consistently shown that women founders are more likely to receive prevention-focused questions ("How will you avoid failure?") while men are more likely to receive promotion-focused questions ("How will you achieve growth?"). Women leave pitches discussing risk while men leave discussing opportunity.

Venture capital also remains one of the most relationship-driven industries in the world, and of course, those networks have been dominated by men. The irony is that investors frequently say they're looking for the "best founders," while sourcing founders through some of the narrowest professional networks imaginable. This means women founders often face a double hurdle: getting access to the room and then convincing people once they're inside it.

If all of the above doesn’t already make things difficult, investors are more likely to fund problems they understand. When founders build products for industries traditionally dominated by men, investors often have immediate context. When founders build products around women's health, caregiving, menopause, fertility, or other experiences that have historically been underrepresented in venture capital, they can face additional skepticism. The market isn't small, but it’s unfamiliar to the people often writing the cheque.

This announcement may feel both encouraging and incomplete. The fact that we still need a dedicated government strategy to help women access capital highlights that there is still a problem the market itself should have figured out by now. The real measure of success will be whether we still need a special program to close the gap in eight years.

Team Toast 🥂

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