Pender Ventures receives funding from VCCI’s Inclusive Growth Stream
We are thrilled to announce that Pender Ventures’ Pender Technology Inflection Fund II LP (“PTIF II” and the “Fund”) has been selected as a recipient under the Venture Capital Catalyst Initiative’s (VCCI) Inclusive Growth Stream. This allocation, under the Inclusive Growth Stream, will contribute to our goal of investing in and scaling inclusive and diverse organisations, which is core to our investment philosophy.
As a VCCI fund recipient, Pender Ventures will be responsible for investing a portion of the federal government’s $50 million commitment to spur innovation and help diverse entrepreneurs scale their business through PTIF II.
“We are excited to receive this funding from VCCI and to be able to put these resources towards closing diversity gaps* in the industry”, said Maria Pacella, Managing Partner at Pender Ventures. “We have been incorporating DEI practices within our investment process with strong early success and this allocation from VCCI will enable us to scale up initiatives that advance diversity and inclusion across our investment portfolio and the wider community.”
“Supporting diverse and under-represented entrepreneurs in the venture capital sector is not only the right thing to do; it is also essential to boosting Canada’s economy to its full potential,” said the Honourable Rechie Valdez, Minister of Small Business. “This new round of VCCI funding is going to address historic challenges for entrepreneurs and start-ups led by diverse individuals, who have historically and unfairly encountered barriers to funding because of their identity. Our government is committed to giving everyone a fair chance at bringing their passion and innovative ideas to the table, no matter who they are or where they come from. We’re doing this by making more capital available to firms led by women and other members of under-represented communities, which will jump-start the development of the new generation of bright and diverse Canadian entrepreneurs and innovators.”
Thank you to Minister Valdez and the Government of Canada for recognizing the value of investing in diversity and inclusivity in our industry. We’re thrilled to continue being a part of driving this necessary change.
We are proud to share our 2023 Impact Report, a reflection of a year in which we were dedicated to promoting diversity and driving inclusion, underpinned by our commitment to Environmental, Social, and Governance (ESG) best practices, as well as enhancing health-focused technology companies, a core sector of focus for PTIF II.
Also see: Ottawa Announces Second Tranche of VCCI Funding to Support Underrepresented Entrepreneurs
Continuous commitment to build a more diverse, inclusive start-up ecosystem
Pender Ventures believes that people are the most important asset in early-stage technology companies and research has shown repeatedly that diversity is positively correlated with better business outcomes. We have been an advocate of diverse teams across companies and prioritize diversity across our entire investment process. In fact, the Investment Team actively screens for diverse and inclusive companies and assesses human capital management practices (including DEI) during diligence. Diversity has to be prioritized and made intentional to be effective. As an early-stage investor, Pender Ventures engages early on with portfolio companies to ensure a diversity-focused mindset is being built into the company from early days as it becomes harder as the company grows. We prioritize conversations related to diversity and engage our in-house Head of People Strategy to help drive those conversations, turn them into action and ensure continuous improvement of portfolio company DEI metrics. Pender Ventures has also been collecting diversity and inclusion information from portfolio companies on an annual basis. These data points help us to recommend changes to the policies and procedures of portfolio companies to continually improve inclusiveness.
Inclusive Growth
Inclusion and growth go hand in hand with numerous studies showing that they elevate each other. In fact, research showed economies grow faster, stronger and for longer periods when prosperity isn’t concentrated with few segments of the population[1]. Moreover, the investment case for DEI is stronger than ever with a 2019 global study from McKinsey found that the greater the gender and ethnic representation amongst executive teams, the higher the likelihood of outperformance. Yet, PitchBook data shows that women-only-led start-ups in the US received just 2.1% of venture capital dollars in 2022, down from 2.2 in the prior year[2]. BIPOC-only-led start-ups have typically received less than 2% of venture capital dollars which has also decreased during 2022[3]. DEI has always been at the core of Pender Ventures’ investment thesis. We have always recognized there is plenty of talent when it comes to underrepresented groups and have committed to making an intentional effort to find it and nurture it.
For Pender Ventures, diversity of representation is more than numbers and should not be just another “tick-box” exercise. Diversity of representation also means diversity of thought as these underrepresented founders often lean into their unique perspectives as their competitive edge. That’s why we are deliberate in the attention we pay to not only hiring and investing in underrepresented groups, but to ensuring these groups are expressing their perspectives and are being heard. By intentionally cultivating a diverse deal flow and network, Pender Ventures has built portfolio that beats the industry’s diversity standards. We are proud to say that women and BIPOC CEOs—not just cofounders—made up 44% of portfolio companies backed by PTIF I, which has been a key contributing factor to the performance of PTIF I.
We believe our commitment to building more diversity throughout the start-up ecosystem will lead to a greater opportunity set of companies, more successful company creation and more investment into those companies leading to better returns, all of which in turn leads to a continuous cycle of improvement of the start-up ecosystem in the long run.
*Diversity Gaps in Venture Capital
Pender Ventures has identified three gaps in the venture capital industry:
- Lack of equitable capital
- Lack of educational resources tailored to underrepresented founders
- Minimal resources aimed directly to increase BIPOC and women participation in the senior management and board of director roles.
Our DEI processes, investment strategy and ecosystem initiatives have been developed to address these gaps and include:
- Mentorship and entrepreneurial support with a particular attention to youth, women entrepreneurs/founders and women investors.
- Commitment to build a more diverse inclusive start-up ecosystem focused on underserved groups in university communities as well as BIPOC founders.
- Portfolio focus on underserved groups.
- Work with portfolio companies with concentration on Leadership Diversity and Competency Matrix Development.
[1] https://www.bloomberg.com/news/articles/2017-09-28/to-fight-inequality-cities-need-inclusive-growth
[2] pitchbook.com/news/articles/the-vc-female-founders-dashboard
[3] cnbc.com/2023/02/02/venture-capital-black-founders-plummeted.html
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