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Q&A: THRIVE VENTURE FUND
Q&A: MICHELLE SCARBOROUGH AN OPPORTUNITY TO THRIVE
BIV MAGAZINE STAFF
Earlier this year, the Business Development Bank of Canada (BDC) launched an investment platform dedicated to supporting the accelerated growth of womenled businesses. The Thrive Platform is the largest platform of its kind in the world, and commits $500 million in capital across three initiatives designed to support female entrepreneurs and emerging female investors. Michelle Scarborough, managing partner of BDC’s Thrive Venture Fund for Women and its predecessor Women in Technology Venture Fund, spoke with BIV about entrepreneurship, supporting women-led businesses and e ecting systemic change. The following conversation has been edited and condensed for length and clarity.
BIV: WHAT IS THE SCOPE OF THIS INITIATIVE?
Michelle Scarborough: The Thrive platform is the largest in the world to help women entrepreneurs across the c anadian landscape to elevate themselves. it’s an investment platform with three main components: A $300 million venture fund, $100 million allocation to invest in emerging managers with women who are general partners or a partner in a fund and the third pillar is the Thrive l ab. The lab itself is dedicated to pre-seed stage women that are looking to build companies. They may or may not have an idea whether that company is going to be venture-backable, but they’re seeking equity capital to help that company get off the ground, and to turn their idea into a commercially viable business.
The lab will be designed by the community, by partners in the market, and it will be a partnership strategy to help those women entrepreneurs as they build companies from the very earliest stages.
BIV: WHAT LESSONS DID BDC LEARN THROUGH ITS INAUGURAL WOMEN AND TECHNOLOGY VENTURE FUND, AND WHAT WAS THE EVOLUTION THAT TOOK BDC TO THIS MUCH LARGER PLATFORM?
MS: When we started the fund in 2017, we started at a time where we knew there was an enormous gap in the market, where we knew that women were an underserved segment when it came to venture capital or access to venture capital. it was designed to solve for that gap. And at the same time, we had allocated about $20 million to invest in that emerging female general partner who wanted to build a venture capital firm. o ver the last five years, we’ve seen an evolution in the market. We’ve seen the growth of more women founding companies; more women wanting to leave their corporate jobs and move into c -suite executive positions in emerging or growing c anadian tech companies. We’re also seeing the emergence of more women becoming investors, both of the angel stage and in venture capital firms. We’re seeing the growth of everything. i started as an entrepreneur and then became an investor. And one of the things that’s really poignant for me is the number, and the increase in the number, of role models in the market. We’re seeing more women write big cheques, we’re seeing more women grow big businesses and those women are acting as role models. And one of the things we consistently hear from the marketplace is the need more of those.
BIV: WHAT GAPS REMAIN IN THE SYSTEM?
MS: We still see gaps at the early stage, pre-seed stage, seed stage – enormous gaps not just in investing in women-led companies but in the pre-seed and seed stages of the technology ecosystem generally. s o we’re solving for that with the fund as well as with the lab. We still also see gaps in terms of talent we’ve got. coming out of co Vid , there were big talent challenges, there’s tons of hiring, lots of people resigning and trying to figure out what they want to be. That created a very hot market for talent and drove the dollars that were being paid to talent up and causing some friction.
What we’re seeing now is sort of a leveling out of that, but talent will still be hot. And c anada right now is also being seen as a place for foreign investors, primarily in the u.s ., and venture capital to come and look for great opportunities. The other thing we’re seeing is enormous opportunities in c anada to build some amazing technology companies here.
BIV: IF WOMEN PITCH THEIR IDEAS AND ARE REBUFFED AT AN EARLY STAGE, ARE THEY MORE LIKELY TO PULL AWAY FROM THEIR IDEAS AND FIND SOMETHING ELSE TO PURSUE?
Michelle Scarborough is the managing partner of BDC’s Thrive Venture Fund for Women
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MS: We hear this a lot. We hear about what happens in the boardroom. What some women will do, and what we tell them is: o ne no is one step closer to a “yes.” When you’re pitching investors, the thing that people need to remember is that this is a long game on both sides. We are looking for people that we want to work with, and the entrepreneur and the female entrepreneur needs to be looking for the same. Who are the people that are going to help her build a successful company? Those are the people that she needs to surround herself with. s o when she gets a “n o,” what she needs to ask is: “Why is that a ‘n o?’ What are the business reasons why that might be a ‘n o’ for this firm?
And how can i leverage that for the next meeting that i’m going to have with a potential investor? Are these the right investors for me as i build the company? Who are the people i need around me? What networks do they have? d o they have deep pockets? Are they going to be able to help me bring this company to market or accelerate its growth in a market that i might not have access to yet?” We’ve tried to help these women position themselves so that they’ve got their best foot forward, and the confidence to stand up in that room and tell their story with conviction and with passion, and are able to identify the right people that they want around them. i think the other thing that we hear, which is really important, is that women tend to focus very practically on how they’re going to build the company. We hear this and we see it: o ften, they will not overinflate or over-exaggerate the story. They’ll be very practical.
Women need to be practical, but they also need to talk about vision and tell the story about what this company that they’re building has the capability to be. in doing so, with practicality, that will get the right investors listening to them.
BIV: WHAT ARE YOUR THOUGHTS ON WHAT IT COULD MEAN TO HAVE FULL PARTICIPATION OF FEMALE ENTREPRENEURS IN OUR ECONOMY?
MS: We know that when you invest in women-led
businesses, those businesses do return more. We are seeing this in studies, and we’re also seeing it in our own portfolio. our country is very diverse. so if you’re taking a product to market, you want to be as diverse as your marketplaces, as the people that you’re selling to. We see that as an enormous opportunity. Because of the nature of what we’re trying to do as investors, the more women-led companies that we can see, the more opportunities we have to knit the ecosystem together through our partners with respect to the lab, the more ways in which we can crowd in private sector capital to help these companies have access to not just the capital they need, but also the networks and the customer base that they require to build these big companies. if you put all of that together, i do think that we over time will be able to make an enormous change, and we will see that happen in terms of economic dollars. But we have a big opportunity right now. And there’s never been a better time to be an investor than now.
BIV: DO YOU HAVE INSIGHTS ON OTHER KINDS OF INVESTMENTS AND INTERVENTIONS THAT COULD BE MADE EARLIER TO SUPPORT THE JOURNEYS OF FEMALE ENTREPRENEURS?
MS: i think we need to start early. We need to teach entrepreneurship earlier in schools and we need to teach kids how to think creatively and problem solve earlier on, so that they’re working on working together to solve for problems as opposed to in a silo all the time. There are great programs out there right now. But if i were a school kid, i would want to be learning about entrepreneurship early, and how that all works, as opposed to later on.
The universities have done a good job of trying to develop mechanisms – through the creative destruction lab and others – to help bring science people together with business people to take these amazing ideas that we have across the country and commercialize them. We need to do more of that and get that out the door earlier, and allow these women in particular to find their voice. WE NEED TO WORK TOGETHER; WE NEED TO FIND WAYS TO OPEN DOORS, TO BE MENTORS AND SPONSORS
BIV: TELL US YOUR OWN STORY – WHAT DID IT FOR YOU?
MS: i had really great mentors, including my parents and my dad in particular. h e was the one that really was the driving force behind me very early on. h e was the one that said, “don’t take ‘no’ for an answer. you can do it. i’ll back you, i will put money into your companies, i will help you get there. And if somebody says ‘no’ to you, get up and keep going.” And that’s kind of what i’ve done my whole career.
BIV: AS YOU SEE IT, WHAT ROLE CAN MEN PLAY IN THIS?
MS: At the end of the day, we’re all one. And men have as big a role to play as women do. We all have to work together on this. culture change doesn’t happen by itself, or by sitting in a room having a conversation with one person. it can help, but it’s not going to solve the problem systemically. We need to work together; we need to find ways to open doors, to be mentors and sponsors – like i had – and we need to do that in a way that parks our egos and allows for openness and creativity to come through. people often are just looking for somebody to talk to and someplace where they can go to learn to evolve their business idea and build their company, where they don’t feel like they’re threatened. Business doesn’t have to be threatening. We got enough going on in the world where we really need to figure out how we work together and in a safer environment. And men have to play a critical role in all of that. ç
