SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

REPORT OF THE CANADA-UNITED STATES COUNCIL FOR ADVANCEMENT OF WOMEN ENTREPRENEURS AND BUSINESS LEADERS 2 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

EXECUTIVE SUMMARY In Canada and the United States, there is an unparalleled opportunity to unlock economic growth by investing in women entrepreneurs.

Few other countries have the same combination of a strong business environment, social and political stability, and access to education that is needed to grow at-scale companies. Yet both nations are selling themselves short—despite starting nearly half of new businesses, women own fewer than 15 percent of businesses with 500 or more employees.

The potential impact of helping more women to scale their companies is immense. Yet our experience and analysis show that women face persistent barriers as they try to grow their businesses. Four stand out: a lack of growth capital; inadequate access to talent, networks, and expertise; unbalanced “family economics”; and pervasive social and psychological biases—both overt and unconscious. While all entrepreneurs face these challenges to some degree, these obstacles are especially acute for women.

It is imperative for economic growth in Canada and the United States to level the playing field for women entrepreneurs. We believe that four specific initiatives by the private and public sectors could make great strides towards this goal:

1. Challenging accelerators and professional networks to take bold action to attract and develop women-owned businesses, starting with tracking and transparency on the number of women entrepreneurs they help scale up.

2. Expanding the use of private sector supplier-diversity programs and increase outreach to women- owned businesses.

3. Enhancing the United States Women-Owned Small Business (WOSB) Federal Contract Program, implement a similar program in Canada within 12 months, and consider linking the programs so they can be accessed by women in both countries.

4. Considering ways that childcare benefits and other family policies could be updated to equalize the “family economics” calculation for women entrepreneurs.

ABOUT THE COUNCIL AND THIS REPORT The Canada United States Council for Advancement of Women Entrepreneurs and Business Leaders was appointed by the American and Canadian governments in February 2017. The Council aspires through its recommendations to increase women’s economic participation and the number of women business leaders; and to contribute to the growth, stronger integration, and greater competitiveness of both the American and Canadian economies.

The Council’s mandate is to report to the Prime Minister of Canada and the President of the United States with recommendations that can reduce the barriers that limit women’s participation in business, support women’s professional advancement, and assist women in starting and scaling their businesses. 3 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

The Council is an independent and autonomous group that makes these recommendations to the private sector and the respective governments. White Paper 21 TheCanada-United Council is taking States a targeted Council approach for Advancement by looking at of five Women “pillars” Entrepreneurs of advancement and and producing fiveBusiness different eaders reports and sets of recommendations. (Exhibit 1). These reports will be released one by one overExhibit the 1coming of 11 months, starting with this report on the topic of “Supporting and Growing Women- Owned Businesses.”

Exhibit 1 The Council’s five pillars

Focus of this paper

Increasing the number Attracting women of women in STEM entrepreneurs, encouraging women to start businesses

Advancing women Council’s pillars as leaders in the Supporting and private sector growing women-owned businesses

Increasing women’s access to capital

Source: Terms of reference of the Canada-United States Council for Advancement of Women Entrepreneurs and Business Leaders

The task for each pillar is to identify the top barriers faced by women and develop a few bold recommendations that could “move the needle” in both countries. Our efforts involve a combination of research and outreach to stakeholders including entrepreneurs, government, the private sector and community groups from across the income spectrum. We are engaging men as well as women and strongly believe that both genders will need to work together to truly drive change. 4 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

For this particular report, we reviewed and synthesized more than 80 research reports, interviewed over 60 entrepreneurs, held two cross-border roundtables, and engaged representatives from different minority groups. We recognize that some socioeconomic groups experience barriers more acutely than others, and acknowledge the great work being done by organizations such as Impakt, the United Nations, the Bill and Melinda Gates Foundation, digitalundivided’s “ProjectDiane,” Indigenous Business Australia, Aboriginal Women’s Business Entrepreneurship Network, and Black Women Connect. While we do not dive deeply into these issues, we encourage the private sector and both governments to consider issues arising from the intersection of race and gender when implementing our recommendations.

THE CASE FOR CHANGE We believe this is a unique moment in time when investing in women entrepreneurs is both an economic imperative and an opportunity to create a more inclusive business environment for future generations of women.

WhiteCanada Paper and the 2 1United States have strengths to build on Canada-UnitedBy many accounts, StatesCanada andCouncil the United for AdvancementStates have two ofof the Women most entrepreneur-friendly business Entrepreneursenvironments in the and world. Business1 They also Leaders benefit from an educated and engaged female workforce and Exhibitmany inspirational 2 of 11 women entrepreneurs. Exhibit 2 provides examples of companies that have been started or scaled by Canadian and American women. We see great potential to create more of them.

Exhibit 2 There are many inspirational success stories of Canadian and American women-led “global champions”

Canada United States Broadband TV ABC Supply Company Clear Banc Alex and Ani Freshco Retail Maintenance Birchbox Global Relay Epic Systems Groupe Germain Hotels Houzz Indigo Indinero Kids & Company J.B. Hunt Linamar Little Caesars Pizza Logistec Medallia Nature’s Path Orange Theory Fitness NRSTOR Pinnacle Group Purdys Chocolatier Spanx T&T Supermarket Tory Burch

There is a strong business case for investing in women entrepreneurs Multiple studies done by organizations such as Catalyst, McKinsey & Company, the Peterson Institute for International Economics, and others find there is huge economic benefit to be realized by increasing the number of women business owners.2 The Royal Bank of Canada estimates that a 10 percent increase 5 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

in the number of women-owned small- and medium-sized enterprises (SMEs) would add an additional CAD $198 billion to Canada’s GDP.3 The Center for Women’s Business Research estimates that increasing the number of women-owned firms with one or more employees could add US $10 trillion to the American economy.4 White Paper 2016 TheseCanada-United estimates are States reinforced Council by studies for thatAdvancement find women leaders of Women contribute to better financial Entrepreneursperformance (Exhibit and 3). Business Reports by Leaders BNP Paribas, Catalyst, Dow Jones, Ernst & Young (EY), First Round ExhibitCapital and 3 McKinseyof 11 & Company all come to the same conclusion – women entrepreneurs have the potential to be key drivers of enterprise growth.

Exhibit 3 Multiple studies find a strong business case for investing in women entrepreneurs 15% 13% In additional profit observed when the share of women Greater revenue achieved by companies run by women of less than in leadership positions went from from 0% to 30%1 35 years old compared to companies run by men of the same age3

+63% +84% +46% +60% Better return Better ROE Better ROIC on sales

Companies with at least one female founder outperformed Fortune 500 companies with 3 or more women on the all-male founding teams by 63% over the past 10 years2 board demonstrated a significant performance advantage over those with the fewest4

1 Marcus Noland, Tyler Moran, and Barbara Kotschwar, Is Gender Diversity Profitable? Evidence from a Global Survey, The Peterson Institute for International Economics, 2016. 2 “Ten Year Project,” First Round Capital, 2015 [Web log post] http://10years.firstround.com. 3 “The emergence of the “Millennipreneur” – 2016 BNP Paribas Global Entrepreneur Report, BNP Paribas Wealth Management and Scorpio Partnership, 2016. 4 Vivian Hunt, Dennis Layton, and Sara Prince, Diversity Matters, McKinsey & Company, 2015; Nancy M. Carter, and Harvey M. Wagner, The Bottom Line: Corporate Performance and Women’s Representation on Boards, Catalyst, 2011.

Too few women lead at-scale companies While the share of women-owned firms has grown over the past decade,5 our research finds that women entrepreneurs struggle to scale up. In both countries, women own about 40 percent of all firms but far fewer at the larger end of the spectrum. According to U.S. Census data, women own 21 percent of companies with one to four employees and fewer than 15 percent of companies with 100+ employees.6 Canada is similar, with women owning 17 percent of companies with one to four employees and only 7 percent of companies with 100 or more employees (Exhibit 4). 6 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

It is worth noting that this trend is even more pronounced for women of color. According to a study by American Express in 2016, women of color started eight out of ten new women-owned businesses.7 One potential explanation is that women of color face higher obstacles in the workplace and instead, chose to pursue entrepreneurial ventures. There are many nuances behind this—for example, the number of firms ownedWhite byPaper Native 2 American1 or Alaska Native women grew at less than half the rate of the ones owned Canada-Unitedby African American States women Council and Latina for American Advancement women. But of on Women average, firms owned by women of color Entrepreneursare smaller and generate and Business less revenue Leaders than Caucasian women-owned firms as a result of the nature of Exhibitbusinesses 4 ofthey 1 1open and because they tend to be younger. This suggests these groups have a particularly hard time reaching scale.

Exhibit 4 In both countries, women are underrepresented as owners among com- panies of all sizes, especially on the larger end

xx Average revenue in Business-owner gender representation by employment size millions of US $2

%, 2012 for the United States and 2014 for Canada

1–4 employees 5–19 employees 20–99 employees 100–500 employees

Male-owned1 64% 0.4 65% 1.7 71% 8.3 77% 41.8

14% 25.5 Female-owned1 21% 0.3 19% 1.1 15% 4.8

Male-owned1 63% 64% 73% 76%

7% Female-owned1 17% 15% 11%

Note: Numbers do not add to 100%—excludes businesses that are equally owned by male and female. 1 Owned at more than 50%. 2 Average revenue by employment size and by gender is not available for Canada. Source: 2012 U.S. Census Bureau; 2014 Canadian Survey on Financing and Growth of Small and Medium Enterprises

The women entrepreneurs we spoke with do not lack ambition or energy, and this is supported by a growing body of research.8 Rather, growth is being impeded by several factors—which also inhibit the formation of women-owned business in the first place. If government and industry can level the playing field, the result would be significant GDP growth and job creation for both countries’ economies. 7 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

White Paper 2016 Canada-UnitedFOUR KEY BARRIERS States Council for Advancement of Women OurEntrepreneurs analysis shows and that Business women entrepreneurs Leaders face four barriers. We acknowledge that many of Exhibitthese barriers 5 of are11 cross-cutting with the other pillars of this Council, but we focused on the ones that are the most acute for women trying to grow their businesses.

Exhibit 5 Female founders are more heavily represented in early financing rounds but raise less growth capital

All male founders At least one female founder Representation of female United States companies classified by latest funding round recorded and by founder gender1, 2 founder by funding stage

From 2009 to 2014, based on Crunchbase data3

Number of funded companies % of total companies with at (by last funding round recorded) least one female founder, %

7,000

19% 20 6,000

5,000 15

13% 4,000 12% 4,842

10 3,000

3,460 2,000

5

1,000 1,278 1,166 518 171 0 0 Seed/Angel Early stage Late stage

1 Early stage: A or B rounds; late stage: C rounds and later. Each company is counted once based on the latest stage they have reached. 2 In Canada, information on VC-backed companies with at least one female founder is sparse and does not lead to meaningful nor comparable data. 3 CrunchBase data from 2009 to 2014 composed of 14,341 US-based startups that received VC funding. Source: Gené Teare and Ned Desmond, “Female Founders On An Upward Trend, According To CrunchBase,” The Crunch, 2015 [Web log post] https://techcrunch.com/2015/05/26/female-founders-on-an-upward-trend-according-to-crunchbase/ 8 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

1. Access to growth capital Expansion capital is a challenge for all entrepreneurs, but our research finds that women experience this struggle more acutely than men. The technology sector offers one example. In both Canada and the United States, firms with at least one female founder receive less than 16 percent of all venture capital funding—and this percentage drops to less than 8 percent when considering companies with only female founders.9 According to Crunchbase data on US-based firms and venture capital, women founders receive proportionately less funding at all stages but especially at expansion stages (Exhibit 5).10 MaRS Discovery District comes to similar conclusions with respect to Canadian venture-backed companies.11

The problem is complex. On one hand, women are less likely to seek funding and tend to rely on personal savings, saying they prefer to retain control over their company.12 On the other, research finds that women are less likely to receive funding when they do seek it.13

Why? One likely reason is that women are evaluated differently by both male and female investors. Studies suggest investors tend to size up a company’s potential differently depending on its founder’s gender. One study of 189 entrepreneurs and 140 venture capitalists found that investors asked men questions about the potential for gains (“promotion questions”) and women about the potential for losses (“prevention questions”)—and that this bias accounted for as much as a seven-fold funding gap between men and women founders.14 This problem is even more acute for Indigenous women and women of color.15

Another reason is the low number of women investors. We heard that trust is a key factor in an investor’s decision to invest—and that it can be hard for women to develop trust-based relationships with male investors. There are too few women in leadership roles in the financial services, asset management, and private equity sectors,16 and fewer than 10 percent of partners at leading venture- capital firms are women.17

2. Access to talent, networks, and expertise We heard that talent, networks and expertise are equally as important to scaling up a company as growth capital. Here too, women are at a disadvantage.

Women start with different networks and tend to spend more time with other women (Exhibit 6). This can limit their access to business leaders and technical talent (positions that are predominantly held by men). Women’s networks can also shrink over time, as female colleagues and contacts leave the workforce to focus on their families.

Women can also struggle to form strong, trust-based relationships with business leaders and sometimes have a harder time finding coaches, mentors, and partners. Approximately 50 percent of women entrepreneurs say they struggle to find mentors,18 and one study found that women are 46 percent less likely to have a “sponsor” who will create opportunities and open doors for them.19 This makes it harder for women to get introduced to potential customers, partners, and investors.

In short, women have a smaller pool of fellow entrepreneurs, technical talent, and informal advisors to tap into as they start and scale companies. White Paper 21 Canada-United States Council for Advancement of Women 9 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES Entrepreneurs and Business Leaders Exhibit of 11

Exhibit 6 Women are three times more likely to rely on a mostly female network

Gender breakdown of women’s and men’s networks Mostly men Mostly women Equal time spent

27% 37% 45% Women’s networks Men’s networks 55%

27% 9%

Source: Women in the workplace 2016, LeanIn.Org and McKinsey & Company, 2016

3. “Family economics” For some women, at-scale entrepreneurship fails to offer a sustainable alternative to regular employment—largely because they face a different cost-benefit equation when it comes to balancing work and family obligations. We found several factors at work in this equation. The biggest is expectations. Women considering entrepreneurship face lower expectations to provide for their families financially and higher expectations to contribute to household work. Compounding the problem is a “perception gap”: one poll found that 46 percent of men but only 32 percent of women believe household tasks are shared equally between partners.20

Another factor is the drive to “do it all.” Many women entrepreneurs try to run both a business and a household, whereas men are more likely to seek support at home.21 A third factor is the stress of launching a company. Starting a business strains family relationships, and research shows this affects women more than men.22 Working mothers are viewed as more distracted and less productive, while working fathers are viewed as more stable and good family providers.23 Finally, there’s a timing concern: one-quarter of new entrepreneurs are between ages 20 and 34, which is also the age of most mothers with newborns.24

4. Social and psychological biases Underpinning each of these barriers is a set of conscious and unconscious biases that causes investors and others to treat women entrepreneurs differently and causes women to doubt their own abilities. Women entrepreneurs are treated differently than men entrepreneurs, but they also face internal barriers that are less pronounced for men. 10 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

One of the most important external barriers relates to the ability to develop trust-based business relation- ships. In our interviews and discussions with investors and entrepreneurs of both genders, we heard that trust is often developed outside of formal work settings, and often in one-on-one interactions. Both women and men told us it’s harder to develop these relationships with someone of a different gender.

This feedback is supported by research. Recent surveys find an alarming reluctance of men and women to spend time alone together in both social and professional settings. For one example, a Morning Consult Whitepoll reported Paper by 2 The1 New York Times found that one quarter think private work meetings are inappropriate, Canada-Unitedand nearly two-thirds States think peopleCouncil should for beAdvancement extra cautious aroundof Women someone of the opposite sex (Exhibit 7). EntrepreneursHalf of men and 60 and percent Business of women Leaders thought having a drink together was inappropriate.25 While the Exhibitsample size of of the11 survey is small and might not be representative, many men and women whom we interviewed said it resonated with their own experiences.

Exhibit 7 Both men and women report reluctance to spend time alone together

Opinion of men and women on being alone together1

Is it appropriate or inappropriate to do the following activities alone with a man/woman who is not your spouse?

Appropriate Did not know/no opinion Inappropriate

Having a drink Women 29 60

Men 41 48

Having dinner Women 35 53

Men 43 45

Having lunch Women 43 44

Men 52 36

Driving in a car Women 47 38

Men 58 29

Having a work meeting Women 63 25

Men 66 22

1 Morning Consult survey of 5,282 registered voters. 11 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

Another survey looked specifically at biases preventing men and women from developing sponsorship relationships. It found that half of junior women and two-thirds of senior men shied away from one-on-one sponsorships out of fear that others would perceive a sexual relationship where there was none.26 Research and experience tell us sponsors (that is, influencers who will open doors, forge introductions, and create opportunities) are critical to scaling up a business. These biases are causing women to miss out.

It is worth noting that business relations between men and women are receiving greater scrutiny in the wake of recent sexual harassment scandals. It is critical that women be encouraged and supported as they come forward about these instances. At the same time, some men have described heightened caution when interacting with women, especially in professional settings.27 A big takeaway is the need to challenge harmful social attitudes and biases, but also to be mindful of overcompensating behaviors that can further isolate women in business.

In addition to conscious and unconscious biases, women also face distinct internal barriers. The most obvious relates to confidence. We heard that women (on average) don’t seem to have the same level of “overconfidence” that men have as they start and scale a business. While overconfidence bias can be a problem for business decision makers, it is considered a key psychological attribute when it comes to entrepreneurship.28 According to one interviewee, “The highly successful women entrepreneurs I know are all superheroes—average women don’t think they have what it takes.”

OUR RECOMMENDATIONS—FOUR BOLD ACTIONS THE PRIVATE AND PUBLIC SECTORS CAN TAKE The issues facing women-owned businesses are material and costly and will require equally substantive changes in policy and practice to redress. We recommend four specific initiatives that would help make significant progress, involving both public and private sector action.

Recommendation #1: All accelerators and professional networks should take bold action to attract and develop women-owned businesses, starting with tracking and transparency The men and women entrepreneurs from both countries we spoke with emphasized the importance of professional networks and accelerators for accessing talent, forming partnerships, meeting new customers and investors, and sparking mentor/sponsor relationships.

Women are underrepresented in almost every accelerator and network of entrepreneurs or business leaders we looked at. But many are taking inspiring steps to increase women’s representation. We applaud these efforts.

For our first recommendation, we challenge accelerators and professional organizations on both sides of the border to make women-owned businesses a real priority, and to commit to tracking and publishing results. To help achieve transparency, we recommend engaging a third party to aggregate baseline data on existing organizations, conduct an annual survey on women-owned business participation, and publish results. We recommend that one or both governments commit funding to support the review. 12 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

To help accelerators and networks move faster, we have identified five best practices that have helped Whiteorganizations Paper attract 21 and develop women entrepreneurs (Exhibit 8). Canada-United States Council for Advancement of Women EntrepreneursAccelerators and networks and Business of all sizes Leaders can learn from others about what works and what doesn’t. Two very Exhibitdifferent 1organizations—Techstars of 11 and the Young President’s Organization—provide interesting case studies on how to tackle these challenges.

Exhibit 8 Five best practices for attracting and developing women entrepreneurs stand out and showed excellent results

Best practice Examples

1 Tracking and transparency MaRS Discovery District reached Understand baseline; make equal representation a top priority; a 30% participation of female actively recruit to increase representation in applicant pool; founders under the guidance of have women in decision-making positions and measure a female CEO progress; transparently report on women-owned business representation and make the organization accountable

2 Women-focused programming EY Entrepreneurial Winning Women™ Training and coaching (eg, responding to preventative program helped participants reach an questions; improve self-confidence); access to corporate average annual growth of 20% in networks and mentors; advice on key issues (eg, visibility revenue; 45% of participants reported & social media, leadership skills, strategy) it was easier to raise capital and 88% saw a positive effect on their self-confidence

3 Co-ed networking Entrepreneurs’ Organization Provide forums for women to network with male provides all participants (male and entrepreneurs; facilitate access to business and technical female) with access to a network of talent of both genders entrepreneurs who share best practices and moral support

4 De-bias investment decisions The Business Development Bank of Promote greater participation of women in decision- Canada conducted an independent making positions at investment firms; challenge decisions accessibility review of all steps in based on stereotypes or unconscious biases and make a female entrepreneur’s journey and this a top priority for the organization is implementing recommendations to drive change

5 Role modeling and public commitment YPO Canada joined the #GoSponsorHer Create “peer pressure” and encourage influencers to Challenge to encourage members publicly take action; set the “tone at the top” through formal to proactively reach out to women CEO/C-Level engagement; attract more female mentors entrepreneurs and has had positive early feedback from men and women

Source: Entrepreneurs’ Organization; EY Entrepreneurial Winning Women; interviews; MaRS Discovery District; The Business Development Bank of Canada; Young Presidents’ Organization White Paper 21 Canada-United States Council for Advancement of Women 13 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES Entrepreneurs and Business Leaders Exhibit 11a of 11

Exhibit 9 Techstars is an example of a top accelerator that publicly committed to attracting more women-owned businesses

The first step towards change is to measure baseline and track progress—“you cannot improve what you don’t measure”1

In 2015, Techstars set bold targets They also committed to publicly . . . while ensuring they were well reporting on advancement . . . equipped to reach their goals • Established 2 objectives to be reached over a period of 4 years • Set the objective of publishing • Implemented a training program for all diversity data annually employees on “unconscious bias” White – Double the Paper number 2of women1 in the applicant pool and across • Reached a participation rate of • Ensured that every selection Canada-Unitedmentor network States Council for19% Advancement in 2016 for women, up fromof Womenan committee includes at least 2 women Entrepreneurs and Business Leadersall-time baseline of 12% Exhibit – Double the 1 proportion1b of 1 of1 • Created the Techstars Foundation to underrepresented minorities improve diversity worldwide participating in the program • Made the diversity initiative a company-wide Strategic Goal for 2016

1 Techstars co-CEO, David Cohen. Source: interviews; Techstars

#GoSponsorHer is helping YPO overcome recruitment and bias challenges

YPO historically struggled to enroll #GoSponsorHer helped YPO It also created a “safe space” for women members signal, recruit, and role model men and women to meet

• Stringent membership criteria • #GoSponsorHer challenges senior • Participants in the challenge “go (company size, revenue) meant few leaders to publicly sponsor public” with their relationship on women qualified a high-potential woman in their social media network and challenge others • “Old boys club” mentality persisted to do the same • Men and women report increased comfort with one-on-one meetings • YPO gained media attention after participating in the challenge and its members took ownership over outreach

Source: YPO and #GoSponsorHer

Recommendation #2. Expand the use of private sector “supplier diversity” programs and increase outreach to women-owned businesses. Procurement programs are an important way for growth-oriented businesses to access capital and networks. In the United States, small businesses that became suppliers to large corporations and governments saw their revenue grow by 250 percent on average, and their number of employees grow by an average of more than 150 percent.29 Large contracts like those offered by governments and large companies can 14 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

serve as collateral, allowing entrepreneurs to secure loans. They also give entrepreneurs more credibility when seeking outside capital and help them link into supply chains.

There is a strong business case for supplier diversity programs. Reports by the World Economic Forum30 and the Conference Board of Canada31 outline important benefits including increased customer satisfaction, higher revenues, better employee retention, more robust supply chains, and increased access to new markets. Another study by Ernst & Young finds that supplier diversity programs can drive up to one-third greater return on the cost of procurement operations.32

The US private sector is relatively advanced on “supplier diversity” programs that proactively promote the use of minority-owned businesses as suppliers for the purchasing entity. Such programs typically include women-owned businesses—though more can be done on outreach. Canada’s private sector is further behind with fewer than 50 percent of large companies (5,000+ employees) having such a program.33

To further increase access to capital and large customers, our second recommendation calls for large and medium Canadian and American companies to redouble their efforts to establish and expand Whitesupplier- Paperdiversity 21 programs, and increase their outreach to women-owned businesses. Canada-United States Council for Advancement of Women TheEntrepreneurs Canadian private and sector Business should aspireLeaders to match the Fortune 500 rate of 97 percent of companies with Exhibitsupplier diversity of 11 programs, and companies from both countries should expand their efforts to reach women-owned businesses. Companies such as Accenture and General Motors (led by Julie Sweet and

Exhibit 10 Accenture is an example of a large company that successfully uses diversity procurement to drive results

Diverse supply chain has been a strategic priority for more than 20 years— Accenture now spends ~30% of total procurement on diverse suppliers

A process that is seamless and easy Targeted mentorship and training Helping women-owned businesses to access through the DSDP1 program is a priority

• Dedicated employees responsible for • Mentoring program which matches • Co-founded WEConnect International support and outreach to diverse diverse businesses (including and has board representation suppliers (including women-owned women-owned businesses) with businesses) Accenture executives to offer • Works with WEConnect and WBENC one-on-one mentoring and assistance to identify and find women-owned • Centralized database accessible to all in growing businesses that can meet Accenture’s suppliers which regroups all active RFP requirements requests for proposal (RFP) • 18-month curriculum that focuses on knowledge capital • Today, 30% of procurement goes to and best practices diverse suppliers with 6–8% to women-owned businesses

1 Diverse Supplier Development Program. Source: interviews; Accenture 15 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

Mary Barra of this Council) are using supplier diversity programs to drive better results for the bottom line and serve as helpful examples for others looking to do the same (Exhibit 10).

“Best practices” we observe for capturing the full benefit supplier diversity include:

ƒƒ Having a dedicated team focused on meeting specific supplier diversity targets

ƒƒ Maintaining a central database of procurement needs and registered suppliers, which makes it easier for employees in charge of the program to match tenders to female-owned suppliers

ƒƒ Prioritizing outreach efforts such as attending conferences and summits and working closely with networks, accelerators, and incubators in the company’s sector

ƒƒ Implementing a supplier diversity policy and a reporting mechanism for measuring progress

ƒƒ Partnering with catalyzing organizations like WEConnect International, WBE Canada, National Women Business Owners Corporation (NWBOC) or WBENC to gain better access to women- owned businesses. For example, WEConnect International trains women entrepreneurs on selling their products and services to large corporations. It currently works with more than 70 Fortune 500 companies with annual purchasing power of over US $1 trillion.

Recommendation #3: Leverage public sector procurement to provide access to capital and large contracts Many of the arguments in favor of supplier diversity in the private sector also pertain to the government. The public sector benefits from diverse suppliers, and startups benefit from the capital infusion and credibility that comes with government contracts.

That said, accessing procurement contracts can be highly time-consuming and costly. Businesses of all types struggle with lack of awareness about tender opportunities, complicated technical and financial requirements, and lack of feedback from procuring agencies. In addition to these common barriers, women-owned businesses face additional challenges:

ƒƒEven higher lack of awareness due to different networks and information gathering systems

ƒƒLower adoption of information and communication technologies

ƒƒFewer employees and resources to absorb high costs and administrative burden associated with government contracts

ƒƒLower demand from government agencies for the types of businesses where women are concentrated (for example, service industries) 16 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

Canada and the United States have taken different paths to addressing these challenges in an effort to ensure women have access to procurement contracts. The United States implemented its Women- Owned Small Business (WOSB) Federal Contract Program in February 2011. The program requires the federal government to award 5 percent of its prime contracts to women-owned small businesses in under-represented sectors. Such tenders amounted to about US $11 billion in 2012. Canada has no formal “set-aside” program for women-owned businesses, and the proportion of public procurement dollars going to women-owned businesses is not formally tracked. However, the government recently set “outreach targets,” aiming to educate more women on accessing government contracts.

Our third recommendation builds on the respective strengths of both countries: we recommend the United States enhance the WOSB Federal Contract Program in specific ways (including by expanding outreach), and we recommend Canada implement a similar program in the next 12 months, while maintaining its focus on outreach and education. For added benefit to both women and government, we recommend opening the programs to women from either country once the Canadian program has been implemented.

a) Strengthening the United States Women-Owned Small Business (WOSB) Federal Contract Program We believe the US WOSB Federal Contract Program plays an important role for women entrepreneurs by providing access to large contracts and capital. But experts and stakeholders we spoke with suggested some areas for improvement. Chief among these is low program uptake, program and certification abuse, and lack of awareness and opportunities to compete.34

We recommend the following steps:

ƒƒExpand outreach by setting outreach targets (for instance, engaging with twice as many WOSBs in 2018 as in 2017) and making agencies accountable.

ƒƒShift from self-certification to certification by trusted third parties or the government. Certification should focus on substantive management and control rather than ownership.

ƒƒExpand the program to more industry categories (that is, NAICS codes) where women are underrepresented.

ƒƒPublish the program’s performance and increase executive accountability for reaching the target of 5 percent.

ƒƒUse private sector networks and public sector communications to further build awareness and help women identify, respond to, and comply with contracts. 17 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

ƒƒImplement random sample auditing and a confidential hotline for reporting of abuse to help ensure there is no “fronting.”

ƒƒAddress the lack of competition by expanding eligibility to set-aside opportunities to other priority firms such as veteran-owned businesses.

b) Implementing targeted procurement in Canada Canadian WOSBs would benefit from a similar federal procurement program with specific targets. We recommend the Canadian government reserve 5 percent of total federal contracts for WOSBs and implement this program within the next 12 months.

We recommend the following steps:

ƒƒMeasure the baseline of current government procurement won by women-owned businesses.

ƒƒSet goals, including a top-level target of at least 5 percent.

ƒƒEstablish a program of third-party or governmental certification to minimize abuse.

ƒƒContinue coordinated and transparent outreach efforts to women entrepreneurs and implement targets and accountability for government agents.

ƒƒPublish public annual reports on the program’s uptake.

c) Linking the American and Canadian programs Women from both countries told us they are eager to work with women entrepreneurs across borders— both to share learnings and to gain access to broader markets. Once the Canadian program has been adopted, we recommend the Canadian and American governments make efforts to ensure both programs can be easily accessed by WOSBs in both countries. For clarity, we recommend the citizenship requirements for both programs should make clear that businesses that are controlled by women of either country may qualify for the programs. To facilitate access, we recommend using an integrated third- party certification process. This process should focus on whether a business is substantively managed and controlled by women rather than strict legal ownership.

To raise awareness among women, we recommend that government agencies and third-party catalysts like WEConnect International, WBE Canada, National Women Business Owners Corporation (NWBOC), and Women’s Business Enterprise National Council (WBENC) make cross-border partnerships a key part of education and outreach.

We believe linking the programs would help tackle the unique barriers faced by women entrepreneurs. It would provide access to a larger pool of contracts and capital, encourage WOSBs to export, and White Paper 2016 Canada-United States Council for Advancement of Women 18 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES Entrepreneurs and Business Leaders Exhibit 8 of 11

Exhibit 11 Benefits of a linked WOSB federal set-aside procurement program

Certification Allowing Canadian and American women to access both programs could lead to . . .

• Increased competitiveness and better prices for both governments

• Greater access to broader markets for women-owned small businesses

• Strengthening of third-party catalysts like WEConnect International, WBENC, WBE Canada, etc

US–Canada • Innovation and best-practice sharing Outreach and Targeted ecosystem between Canadian and American women- education procurement owned small businesses

• Creation of sub-contracting opportunities

contribute to a community of WOSBs operating across the Canada–US border. Linking the programs would also benefit the respective countries more broadly (Exhibit 11).

Recommendation #4: Consider ways that childcare benefits and other family policies could be updated to equalize the “family economics” calculation for women entrepreneurs Almost all women interviewed said they struggled, to some degree, with the challenge of balancing entrepreneurship with family obligations. They noted that unpaid care work still falls predominantly to women—and that for them, this expectation increased the cost of starting and scaling a business.

To alleviate this, we recommend that both governments explore policies that would lower the cost of unpaid care, especially for women. This could include things such as maternity leave policies and tax incentives. It could also include measures to level the playing field between caregivers—for example, paternity leave policies.

We recognize that Canada and the United States have taken different approaches to family policy and unpaid care work and do not suggest there is a “one-size-fits-all” solution. In the United States, we heard women say that the high cost of childcare or in-home support prevented them from scaling their companies to their full potential. In Canada, we heard the need for more affordable quality childcare programs. Whatever form they take, these policies should lower the cost of entrepreneurship by offsetting the unpaid care burden that still disproportionately falls to women. 19 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

A final word and call to action is needed on the persistent social biases that are holding women back and the need for men as well as women to be part of the solution. The reality is that women entrepreneurs cannot reach their full potential without men, and vice-versa. Initiatives like #GoSponsorHer and HeForShe are engaging men to build momentum around social change—we applaud these efforts and encourage the public and private sectors to do more.

We believe that the four recommendations outlined in this report will set government and business on a path that will bring thousands of women-owned businesses into the two nations’ economies, and will help current business owners scale to the size of enterprises that can truly move the economy. But it will take cooperation and dedication from both countries’ private and public sectors to truly drive change.

1 Ruta Aidis, Julie Weeks, and Katrin Anacker, The Global Women Entrepreneur Leaders Scorecard 2015: From Awareness to Action, produced by ACG Inc and sponsored by Dell, 2015; Klaus Schwab, Global Competitiveness Report 2014–15, World Economic Forum, 2015. 2 Vivian Hunt, Dennis Layton, and Sara Prince, Diversity Matters, McKinsey & Company, 2015; Nancy M. Carter and Harvey M. Wagner, The Bottom Line: Corporate Performance and Women’s Representation on Boards, Catalyst, 2011; Marcus Noland, Tyler Moran, and Barbara Kotschwar, Is Gender Diversity Profitable? Evidence from a Global Survey, The Peterson Institute for International Economics, 2016; “Ten Year Project,” First Round Capital, 2015 [Web log post] http://10years.firstround.com; The emergence of the “Millennipreneur” – 2016 BNP Paribas Global Entrepreneur Report, BNP Paribas Wealth Management and Scorpio Partnership, 2016. 3 Canadian Women Grabbing the Baton, RBC Economics Research, 2013. 4 Hassan Pordeli and Peter Wynkoop, The Economic Impact of Women-Owned Businesses In the United States, underwritten by Walmart, National Women’s Business Council and Center for Women’s Business Research, 2009. 5 The 2016 State of Women-Owned Businesses Report, Womenable for American Express OPEN, 2016; Jung, Owen, Industry Canada Small Business and Tourism Branch, 2010. 6 For our purposes, “ownership” means more than 51 percent owned by women. 7 The 2016 State of Women-Owned Businesses Report, Womenable for American Express OPEN, 2016. 8 Global Entrepreneur Report, BNP Paribas, 2016; The Power of Parity: Advancing Women’s Equality in Canada, McKinsey Global Institute, 2017; Shattering Stereotypes: women in entrepreneurship, Centre for Entrepreneurs and Barclays, 2015. 9 Julia Dawson, Stefano Natella, and Richard Kersley, The CS Gender 3000: the Reward for Change, Credit Suisse Group AG Research Institute, 2016. 10 Gené Teare and Ned Desmond, “Female Founders On An Upward Trend, According To CrunchBase,” The Crunch, 2015 [Web log post] https://techcrunch.com/2015/05/26/female-founders-on-an-upward-trend-according-to-crunchbase/. 11 Adam Jacobs and Sameer Vasta, “Toronto’s entrepreneurs: A look at funding and revenue,” MaRS Discovery District, 2012 [Web log post] https://www.marsdd.com/systems-change/data-catalyst/news/funding-revenue-toronto-entrepreneurs/. 12 Venkat Kuppuswamy and Ethan R. Mollick Hubris and Humility: Gender Differences in Serial Founding Rates, 2015; Clare Beckton, Janice McDonald, Samina M. Saifuddin, and Umut Riza Ozkan, A Force to Reckon With- Women, Entrepreneurship And Risk, BMO, The Beacon Agency, Carleton University, 2016; Entrepreneurship policy digest – Women entrepreneurs are key to accelerating growth, Kauffman Foundation, 2015. 13 Alicia Robb, Susan Coleman, and Dane Stangler, Sources Of Economic Hope: Women’s Entrepreneurship, Kauffman Foundation, 2014; Venkat Kuppuswamy and Ethan R. Mollick, Hubris and Humility: Gender Differences in Serial Founding Rates, 2015. 14 Dana Kanze, Laura Huang, Mark A. Conley, and E. Tory Higgins, “Male and Female Entrepreneurs Get Asked Different Questions by VCs — and It Affects How Much Funding They Get,” Harvard Business Review, 2017 [Web log post] https://hbr. org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get. 15 See for example: Kathryn Finney, The Real Unicorns of Tech, The #projectDiane Report, 2016; The 2016 State of Women- Owned Businesses Report, Womenable for American Express OPEN, 2016; Creating a New Narrative: Empowering Indigenous Women Through Entrepreneurship, Impakt, 2017. 16 Women in the Workplace 2016, LeanIn.Org and McKinsey & Company, 2016. 20 SUPPORTING AND GROWING WOMEN-OWNED BUSINESSES

17 Ned Desmond and Gené Teare, “The first comprehensive study on women in venture capital and their impact on female founders,” The Crunch, 2016 [Web log post] https://techcrunch.com/2016/04/19/the-first-comprehensive-study-on-women-in- venture-capital/. 18 Entrepreneurship policy digest – Women entrepreneurs are key to accelerating growth, Kauffman Foundation, 2015. 19 Sylvia Ann Hewlett, with Kerrie Peraino, Laura Sherbin, and Karen Sumberg, The Sponsor Effect: Breaking Through the Last Glass Ceiling, Harvard Business Review Research Report, 2010. 20 “What men and women think about their partners’ careers and help at home,” The Economist, survey conducted by YouGov, 2017. 21 Nurturing Entrepreneurs’ Work–Family Balance: A Gendered Perspective, Eddleston and Powell, 2012. 22 Alex Krause and Emily Fetsch, Labor after Labor, Kauffman Foundation, 2016. 23 Ibid. 24 Entrepreneurship policy digest – Women entrepreneurs are key to accelerating growth, Kauffman Foundation, 2015. 25 Morning Consult poll of 5,282 registered voters, published in the New York Times, 2017. 26 Sylvia Ann Hewlett, “Threatened by Scandal, Women Need Support,” Harvard Business Review, 2010 27 Claire Cain Miller, “Unintended consequences of Sexual Harassment Scandals,” The New York Times, 2017. 28 Venkat Kuppuswamy and Ethan R. Mollick, Hubris and Humility: Gender Differences in Serial Founding Rates, 2015. 29 Research on Women’s Participation in Corporate Supplier Diversity Programs, National Women’s Business Council, 2015. 30 The Global Gender Gap Report 2015, World Economic Forum, 2015. 31 Nadine Hakim and Louise Chénier, The Business Case for Supplier Diversity in Canada, The Conference Board of Canada, 2016. 32 How can Greater Supplier Diversity Unclog your Growth Pipelines?, EY, 2015. 33 Paul D. Larson, Cathy Gallagher-Louisy, and Laura Armenio, “Supplier Diversity in Canada,” the Canadian Center for Diversity and Inclusion and the University of Manitoba, 2016; Nadine Hakim and Louise Chénier, The Business Case for Supplier Diversity in Canada, The Conference Board of Canada, 2017. 34 Barbara Orser, Allan Riding, and Julie Weeks, “The efficacy of gender-based federal procurement policies in the United States,” Small Business Economics, 2017; Statement on the Federal Government Meeting the 5% WOSB Goal, National Women’s Business Council, 2016; Best Practices in Federal Procurement A Study of the Successes and Barriers for Women-Owned Businesses, National Women’s Business Council, 2006.