Five Questions with MaRS IAF’s Michelle McBane and BDC’s Michelle Scarborough

Businesswoman at the starting line on long desert highway; Photo courtesy of DNY59/iStock/Getty Images

While female founders are a growing presence in North America’s tech sectors, a wealth of anecdotal and statistical data show women-led startups face barriers to accessing risk capital.

This week an important step was taken to reverse the trend in Canada. StandUp Ventures Fund I, a women-focused pre-seed and seed fund, raised an initial commitment and closed its debut deal.

The fund, managed by MaRS Investment Accelerator Fund, is earmarked for investments of $250,000 to $1 million in cleantech, IT and life-sciences companies that have at least one female founder in the C-suite.

Targeted to raise $15 million, the fund secured a $5 million commitment from BDC Capital. The money came from a $70 million Women in Tech program set up in November. Last month, Michelle Scarborough was hired from Kensington Capital Partners to oversee the scheme.

PE Hub Canada sat down with Scarborough and MaRS IAF Investment Director Michelle McBane to talk about the fund, its goals, and challenges faced by women entrepreneurs.

Q: What is StandUp Ventures Fund I’s fundraising strategy? Will we see other women-focused funds with BDC as the anchor LP?

MM: We plan to continue fundraising over the next six to 12 months, introducing StandUp to potential limited partners, including corporations, family offices and high-net-worth investors. With $5 million in the bank, we can begin investing in up to a dozen companies. If we secure more money, we can increase the target to 20 companies.

We believe StandUp will help fill the gap in seed-stage financing of women-run startups in Canada. In addition to capitalizing companies up to their Series A rounds, it will give female founders access to key resources, such as networks and mentoring.

MS: BDC felt that partnering with MaRS IAF was the right thing to do to establish StandUp. MaRS IAF has a long history of financing early-stage companies and a solid track record. It has also been actively investing in women entrepreneurs, with more than 12 percent of its portfolio having female representation at the C-suite level.

Our Women in Tech program will look into more fund opportunities. But we are likely to commit a large portion of the $70 million to direct investments in Series A and later-stage financings. Ultimately, we aim to offer a full spectrum of venture and growth capital solutions to create opportunities across the value chain.

Michelle Scarborough, Managing Director, BDC Capital
Michelle Scarborough, Managing Director, BDC Capital

Q: StandUp’s debut deal was Tealbook, a software company founded by CEO Stephany Lapierre. What drew you to it? What other opportunities are being explored?

MM: I’ve been following Stephany for a while. She’s a serial entrepreneur with a classic product-marketing background. She assembled an excellent team at Tealbook and the business has gained traction. Its technology, which puts actionable supplier intelligence into the hands of enterprises, has been confirmed by customers as uniquely effective.

StandUp joined Tealbook’s seed round, which was substantial. MaRS IAF invested alongside the fund, as did several angel investors.

We are sourcing opportunities by leveraging MaRS IAF’s experience with women-run startups, such as Axonify (a corporate e-learning provider headed by Carol Leaman) and Bridgit (a construction project manager founded by Mallorie Brodie and Lauren Lake). We already have strong deal flow, with two more investments in the offing.

MaRS IAF had good luck with female founders and the experience taught us how to spot the best and brightest. These are vital tools for placing bets because information at the early stage can be limited.

Michelle McBane, Investment Director, MaRS Investment Accelerator Fund
Michelle McBane, Investment Director, MaRS Investment Accelerator Fund

Q: Research tells us female entrepreneurs fare less well than male counterparts when raising risk capital. Is this your experience?

MS: I’ve been fortunate to work with investment professionals who showed little evidence of overt gender bias. But it definitely exists and the statistics are proving it. The real question is what choice to make when it happens.

MM: Research recently featured in the Harvard Business Review points to the role played by gender stereotypes in pitches to venture capital firms. Female founders pitching early-stage opportunities are sometimes viewed through a narrow lens, especially if they have no track record and few references.

That’s why StandUp is essential. It will see women-led startups through an expanded lens. We’ll be looking for a range of traits and indicators of a founder’s ability to develop an enterprise team and culture, raise capital and acquire customers.

MS: I think StandUp, BDC’s Women in Tech and related initiatives also contribute to a broader goal. There are more women in the workplace than ever before and many are looking at career paths in technology sectors. More women are starting new companies and increasingly occupying top leadership positions.

We need to actively encourage these trends because diverse organizations perform better than homogeneous ones. Businesses become stronger as a result of diversity.

Q: Do you think the situation would improve if we had more female VCs?

MS: Yes. Research suggests that having a woman at the partner or executive level in a venture capital firm results in an increase in investments in companies with a woman in the C-suite. There seems to be a clear link between the two.

The venture industry is high risk and not for the faint of heart. It’s also a relationship business because relationships are key to success. The addition of women GPs supports this by encouraging more diverse networks and viewpoints, which results in better decision-making.

MM: Ellen Pao (who filed a gender discrimination suit in 2012 against former employer Kleiner Perkins Caufield & Byers) started a conversation about equality in Silicon Valley. It’s a much needed conversation. I believe we’re on a different playing field in Canada because of our more diverse culture.

Q: How do you feel about being a trailblazer in Canada’s VC industry?

MM: I don’t feel like a trailblazer because I had great women mentors, such as Kerri Golden (partner and CFO, Information Venture Partners), Ilse Treurnicht (CEO, MaRS Discovery District) and Whitney Rockley (managing partner, McRock Capital).

My experience speaks to the importance of role models for next generations of female entrepreneurs and investors. You can’t be what you can’t see. Positive examples of women-run startups backed by StandUp will hopefully inspire others.

MS: I also had the privilege of having great mentors early on. I feel leading BDC’s Women in Tech is one of the most important things I can do right now to encourage more women to enter venture and technology professions. Above all, we can provide the tools and resources needed to help women launch and lead world-class companies.

Photo of businesswoman at starting line courtesy of DNY59/iStock/Getty Images

Photo of Michelle Scarborough courtesy of BDC Capital

Photo of Michelle McBane courtesy of MaRS Investment Accelerator Fund

Take your pick!

  • Buyouts delivers exclusive news and analysis about private equity deals, fundraising, top-quartile managers and more. Get your FREE trial or subscribe now.
  • VC Journal provides exclusive news and analysis about venture capital deals, fundraising, top-quartile investors and more. Get your FREE trial or subscribe now.