Breaking Barriers: Raising Capital and Scaling Women-Owned Business

Author: Wendy Cukier, Founder & Academic Director, Diversity Institute & Academic Director Women Entrepreneurship Knowledge Hub

Women-owned businesses are on the rise in Canada, but scaling them remains a significant challenge. In 2023, women were majority owners of 17.8% of Canadian SMEs, up from 15.6% in 2017. Yet they made up only 12.3% of high-growth firms – those with revenue growth over 20%– and just 2.1% projected rapid growth, compared to 3.3% of entrepreneurs overall. This gap isn’t due to lack of ambition or capability, but to systemic barriers – particularly in accessing capital. Financing is a challenge for all SMEs, but research consistently shows women entrepreneurs face a steeper climb.

Financing Gaps and Barriers

In 2023, majority women-owned businesses had the lowest loan approval rate: 85.9%, compared to 88.2% for men. Among those denied, 63.6% of women cited insufficient sales or cash flow – versus about 40% of men. Lenders are more likely to perceive women-led firms as risky, especially in a volatile post-COVID economy. Without capital, businesses struggle to stabilize revenues – yet without stable revenues, they’re denied capital. The cycle reinforces itself. Women entrepreneurs are also more likely to rely on personal networks and bootstrapping, which can limit scale, especially without access to venture funding or institutional capital.

Sector Bias and Structural Gaps

Women-owned firms are overrepresented in sectors like retail, services, education, care, and health – areas often overlooked by scale-up and innovation policy. Canada’s innovation supports still lean heavily toward tech, despite high-growth firms existing across all sectors. According to Statistics Canada (2024), the goods-producing sectors with the highest proportion of high-growth firms include construction (10.2%), agriculture and natural resources (9.6%), and mining and oil and gas (9.3%). In services, leaders include information and cultural industries (11.6%), professional services (10.2%), and finance and insurance (10.2%). Yet firms in care, beauty, and wellness – where women entrepreneurs thrive – often don’t qualify for innovation supports, even though research from the British Beauty Council shows these businesses have higher growth, more exports, and lower failure rates than tech startups. The result is a double disadvantage: women entrepreneurs are less likely to receive funding and less likely to be eligible for targeted public investments.

Emerging Sectors and Untapped Potential

Despite structural barriers, women entrepreneurs continue to break new ground – particularly in emerging sectors. One example is Femtech, or female-focused health and wellness tech. Canada ranks among the top five countries globally for Femtech companies. The Canadian market is projected to grow 16.8% annually, reaching USD $3.8 billion by 2030.

Studies show women-owned firms in these “feminine” industries are more likely to achieve high. growth than those in traditionally male-dominated sectors. Their success stems from addressing underserved needs and leveraging lived experience – yet many still face investor bias due to unfamiliarity with these markets.

There are also notable headline successes. 1Password, co-founded by Sara Teare, raised over $900 million and reached a valuation of $6.8 billion. Clearco, co-founded by Michele Romanow, pioneered new growth capital models and hit a $2 billion valuation. Sheertex, maker of unbreakable tights, reached $350 million in 2022 before facing a downturn – a reminder that scale comes with risk.

These stories matter – but they remain exceptions, not the norm.

Why it Matters

Removing capital barriers for women entrepreneurs is more than fairness – it’s economic strategy. Women-led businesses reinvest in communities, support social impact, and mentor others, creating a multiplier effect. They also contribute to greater economic resilience and sectoral diversity – key in an era of global uncertainty. 

Helping more women scale expands Canada’s pool of high-growth firms, unlocks overlooked innovation, and makes economic growth more inclusive and sustainable.

Final Thoughts

Women entrepreneurs are vital to Canada’s prosperity. Without intentional action to address capital access, their full potential will remain untapped. That means redesigning financing systems, expanding definitions of innovation, and confronting systemic bias in investment and lending.

The message is clear: if we want more scale-ups in Canada, we need to start by backing more women with the capital they need to grow