Crucial Conversations

Konata Lake, Partner at Torys LLP, in conversation with three women founders on how to increase diversity and representation in the startup world

Conversations on how to create more diversity within the startup ecosystem are more prevalent today than they were even five or ten years ago. From C-suite level positions devoted to diversity, to funds targeting women and diverse founders, we’re seeing organizations take concrete strides. But if you look at the data, there still remains a significant funding gap: In the U.S., women founders raised just two per cent of venture capital funding, according to a 2021 Pitchbook report, while Black founders raised around than one per cent. It’s true that progress—meaningful, tangible progress—takes time, but it also takes concerted, intentional, consistent effort.

As Chair of the Emerging Companies and Venture Capital Practice at Torys LLP, I think about these challenges often. I see it as my responsibility to push these conversations forward and help bring more women and people from diverse backgrounds into the space. We know greater representation helps inclusion and equity. When we bring more perspectives to the table, we create more opportunities for those whose experiences are different than our own.

In the spirit of pushing this conversation forward, I recently had the opportunity to talk with three women leaders—Fadwa Mohanna, CEO and Founder of One37 ID; Katy Yam, Partner at RealVentures; and Lise Birikundavyi, Managing Partner at BKR Capital—about inclusion, creating opportunities in the startup space and the actions we can all take to drive progress. I hope it inspires and encourages you to take these conversations back to your own companies and boardrooms.

 Konata Lake: Fadwa, how would you characterize the state of the ecosystem today?

 Fadwa Mohanna: With all the talk about women entrepreneurs and women in tech, there is a belief that starting a business, getting funded and scaling, for women entrepreneurs, has become easier. But when we look at the data, the numbers tell a different story and are still quite dismal. The barriers are well-documented, but in nutshell, the entrepreneurship ecosystem remains largely a system built by men, for men, and not ready yet, apart from some exceptions, to welcome women. It’s important to recognize there is a huge systemic imbalance hindering women’s ability to start a business, get funded and scale successfully. It isn’t something that can self-correct—it needs a clear policy and strategy to be corrected. We need to find ways to address the huge imbalance and celebrate the leaders who support women and push for diversity in their investments and organizations.

 Katy, as an investment fund partner, what’s your take?

 Katy Yam: I think we have to build a groundswell of community to encourage and support women to enter and stay in startupland. We have to plant the seeds of entrepreneurship in the minds of young women and diverse groups who may have never considered this as a career path. We may only see the needle move years from now but we have to start now in order to one day reap what we sow. We’re not seeing huge changes in the numbers because we have to build the foundation to create the groundswell—I have every confidence that we will get there if we continue our efforts in a consistent manner over the long term. Representation is important, we have to build the funnel. We have to nurture the potential, and ignite the idea of being an entrepreneur or an investor in people who may have never thought of this as a career. I choose to invest my time in diverse founders who are not in my portfolio to develop, coach, ideate, connect in order to build that funnel, to build a community and help people explore.

 How do you think the lack of representation from women founders or those from diverse backgrounds hurts the industry as a whole?

 Lise Birikundavyi: This is something our fund is grounded on and why we exist—to recover some of the value that has been lost to lack of diversity. Despite the black women being the fastest growing group of entrepreneurs in North America, according to a report from JP Morgan, we know that only about one per cent of total funding in venture capital investment goes to Black start-ups. Citigroup recently calculated that the loss to the North American economy linked to this under-investment in the past 20 years amounted to $16 trillion USD. It’s a huge impact. The other missed opportunity is the number of innovations that we’ll never see. The lack of representation is costing us more than money as a society.

What are some of the steps organizations can take to increase representation?

Katy: If you want more representation, you have to work harder to hire. If you’re looking for people to fit a specific mold that you have always used to evaluate people who weren’t trained to fit into that mold to begin with, it won’t work. If you want to hire atypically, you need to change your process and diversify your evaluation grids to be more adaptive and test for transferable skills, which most organizations don’t do. The systems and processes are not yet adapted but I think people are starting to correct those. The days of “Well,no diverse candidates applied” should no longer be acceptable, hiring managers need to challenge themselves and their recruiters to only start interviewing once the applicant pool is at least at 50% diverse applicants. You’ll be amazed how creative folks can get when they have to hit metrics like this in order to proceed.

What advice do you have for women from underrepresented groups who want to launch their own start-up?

Lise: For us, as members of these groups, building something often becomes bigger than us because our peers are watching, the younger generation is watching and the ecosystem is watching. While this adds an important mission that can have benefits for society, it does create strong pressure that is hard to manage. It’s important to create your own support system, surrounding yourself with good mentors, advisors, forward thinkers and people with similar lived experiences to avoid being lonely on this journey.

Fadwa: I would add that there are going to be a lot of rejections on your path but that should not be taken as an invalidation of your ideas. Take every “no” as one step closer to the “yes.” Connect with fellow women entrepreneurs through meetups and conferences and plug into those networks. No matter how bumpy the road is, keep going, maneuvering, and adjusting your course until you make it.

There’s a lot of focus on institutions and what they should do, but what do you think the role of individuals can be in creating change?

Katy: I actually think institutions are moved by the individuals within them and if we don’t start at that level, the institution won’t move. It’s easy to hide behind the collective institution and say, “It’s not me; what can I do? I’m just one person,” but we have to stand firm in our beliefs about what’s important and find allies who share the same thoughts and that’s how you move the needle. From an institutional level, hiring is where it starts. I think unfortunately a lot of human resources professionals aren’t trained effectively on how to hire for diversity. It’s not just doing DEI training, it’s about getting networked into those communities; it’s about ensuring diverse candidates are aware of the opportunity and that they are being encouraged to apply.

What’s next for the industry?

Lise: There’s a loud call for change in what has traditionally been accepted as the bedrock of workplace systems for certain industries. We need more inclusive systems that consider our differences by gender and race and create a new normal around that. We’re still seeing challenges with the retention of diverse women in the workforce and their progression into senior roles. We need to dismantle the systems of bias towards women who are raising their families, which then affects retention of women in these roles and their ability to enter C-suite roles. For example, networking and other important events that are held at night or require travel. The industry should make more efforts to have meaningful networking events during the day, holding more virtual events and not penalizing parents who prioritize their families. 

Fadwa: Well, we know there are fewer women and people from diverse backgrounds in STEM studies, that fewer women are employed in the sector, and that retention is a challenge. At the founder level, they struggle much more and receive far less funding. At every step, we are seeing disadvantages. The industry at large needs a moment of reckoning and awakening. Without an honest acknowledgement of the systemic and endemic failure to support women in tech and especially those from diverse backgrounds, we’ll continue to see diversity-washing and hollow promises. We need to be bold in accepting the challenge and implement intentional, well-thought-out plans to support increased diversity.