THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, May 7, 2026
The Standing Senate Committee on Banking, Commerce and the Economy met with videoconference this day at 10:32 a.m. [ET] to examine and report on access to credit and capital markets for small- and medium-sized enterprises as the basis for growth and improved productivity in the Canadian economy; and, in camera, for the consideration of a draft agenda.
Senator Clément Gignac (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I’d like to welcome those who are onsite with us today, as well as those watching us on the Web on sencanada.ca.
My name is Clément Gignac, I am a senator from Quebec and Chair of the Standing Senate Committee on Banking, Commerce and the Economy.
Before we proceed, I’d like to ask my fellow committee members to introduce themselves.
[English]
Senator Pupatello: Senator Pupatello from Ontario.
Senator Fridhandler: Daryl Fridhandler, Alberta.
Senator Loffreda: Senator Tony Loffreda, Montreal, Quebec.
[Translation]
Senator Henkel: I am Danièle Henkel, from Quebec.
[English]
Senator Yussuff: Hassan Yussuff, Ontario.
Senator McBean: Marnie McBean, Ontario.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator Wallin: Pamela Wallin, Saskatchewan.
[Translation]
The Chair: Colleagues, this is our fourteenth meeting on the special study on access to credit and capital markets for small- and medium-sized enterprises as the basis for growth and improved productivity in the Canadian economy.
I’d like to welcome the three witnesses who are joining us today. I’m sure it’ll be a very interesting discussion.
From The51, we have Shelley Kuipers, Co-Founder and Chief Executive Officer; from Evol, Géraldine Martin, Chief Executive Officer; and from Shorefast, Zita Cobb, Chief Executive Officer and Founder.
I understand you’ve prepared opening remarks. Thank you for limiting yourselves to five minutes each. We will then move to a question period.
Ms. Cobb, if you want to start, the floor is yours.
Zita Cobb, Chief Executive Officer and Founder, Shorefast: Good morning and thank you, Mr. Chair.
Honourable senators, ladies and gentlemen, thank you for this invitation.
[English]
I’m Zita Cobb, Founder and CEO of Shorefast and the Shorefast Institute for Place-Based Economies. At the root of my remarks is a question about what has value to Canadians and how we protect, develop and care for it.
I come from Fogo Island, off the northeast coast of Newfoundland, one of the 5,000 incorporated communities that make up this country: places where social, cultural and economic capital has formed over generations.
Twenty years ago, my brothers and I came home to do what we could for the island’s economy. In doing this, we learned that the market and government institutions that shape our economy do not optimize for where Canada’s assets reside — in the places we live. A strong nation is the sum of strong places. Beneath the many crises we hear cited often — housing, affordability, economic opportunity and mental health — sits a crisis of place.
What is possible? Fogo Island is a community of 2,200 people. It has faced what thousands of Canadian communities know increasingly well: out-migration, an aging population and the squandering of valuable assets made dormant by policies and investment decisions that are made far away from where the impact lands.
Shorefast created the Fogo Island Inn, which opened in 2013. The inn employs more than 220 people and is widely recognized as the leading global model of community-led, regenerative tourism. More than half of every guest dollar stays on Fogo Island; more than 96% stays in Canada. To make that flow of money visible, Shorefast developed, trademarked and deployed Economic Nutrition labels like this. It is a tool that shows, with the clarity of a food label, where money goes when you spend it.
Since 2013, our Shorefast work on Fogo Island has contributed more than $270 million to Canada’s GDP. If even 10% of Canada’s 5,000 communities could achieve Fogo Island’s economic growth in absolute terms, the result would be an additional $135 billion to our national GDP. If sustainable economic development is possible in a small community on the edge of the North Atlantic, it is possible in communities across our country.
What stands in our way?
Small- and medium-sized enterprises, or SMEs, account for two thirds of Canada’s employment and contribute close to half of our GDP. Yet, only 11.5% of outstanding business loans in Canada go to SMEs. The median in the Organisation for Economic Co-operation and Development, or OECD, is 44%. We are an extreme outlier.
Roughly 85% of Canadian municipalities do not have a bank branch within their boundaries. Even where a branch remains, credit decisions are made elsewhere. Small-business lending is rooted in local knowledge and relationships — and we have systematically removed both. Where lending is available to SMEs, it is expensive and imposes great personal risk: personal guarantees and family homes pledged as collateral.
This lack of financial access has made Canada a country of stranded assets. Three quarters of Canadian small-business owners plan to exit within the next decade. Without a financing pathway for sales to potential new local owners, employees or community trusts, that wave of retirements will accelerate business closures and consolidation into distant ownership. It does, in the end, matter who owns what and where they are.
Our financial regulators say, as Prospero says in Shakespeare’s The Tempest, that the system is “so safely ordered” — no hair lost; banks well capitalized. But that accounting is blind to the businesses that never opened or expanded, the successions that never happened and the communities that quietly hollowed out — and we see this in places across our country. Blindness to our true assets and subpar risk aversion is not in our people; it is in our institutions.
What could help: We need to strengthen what we have. Community Futures and CBDC offices offer expensive debt and have a loss rate of less than 1%. That is not strength; it is the system holding capital back. The mandate of the Business Development Bank of Canada, or BDC, should permit, even expect, the kinds of losses that allow a development bank to deploy real capital. A development bank making profits is not lending; it is rationing.
Second, get the regulatory frame right. The mandate of the Office of the Superintendent of Financial Institutions, or OSFI, is to protect against the failure of the system, not to deliver zero individual failures. Recalibrating risk weights is in federal hands. We should require big banks to serve SMEs across a variety of geographies; enable new intermediaries, such as fintechs, and enable credit unions by such measures as removing interprovincial barriers and expanding their capital pools.
Third, align incentives. Tax incentives for employee ownership trusts and community-ownership transactions, paired with the enhanced lifetime capital gains exemption for owners selling within their communities, would help level the playing field.
Fourth, make money visible. Adopt Economic Nutrition labelling to align government procurement with economic priorities. Knowing where the money goes is the first step to directing it better, and buying from SMEs is a form of financing.
In closing, Fogo Island is one example of what is possible when a community activates its own assets. Our story may be extraordinary but need not be exceptional. Canada is rich in places that hold human and natural assets; we need to activate them.
Twenty years of work has taught us that the deepest obstacles are not in our communities; they are in our institutions. Our economy has been optimized for large institutions, often at the expense of places. The federal role is to change that — to build the frameworks that allow capital to flow to small- and medium-sized businesses across the country, in every region, in communities of every size. The scale and reach of the solutions must match the scale and reach of our Canadian reality. Let’s optimize for that. If we want to strengthen the nation, we have to include the country.
Thank you very much.
The Chair: Thank you, Ms. Cobb.
[Translation]
Géraldine Martin, Chief Executive Officer, Evol: Thank you, Mr. Chair. Honourable senators, I have been committed to entrepreneurship for 27 years. I arrived in Quebec 26 years ago as an immigrant and rose through the ranks to become the first woman to lead the largest economic newspaper in Quebec. I hold a master’s degree in finance, and I like to combine the rigour of numbers with the reality on the ground.
Every day, from coast to coast, Canadians build businesses that are the lifeblood of our socio-economic vitality. Being a nation of owners means ensuring our decision centres stay here and our supply chains are domestic. It means controlling our economic destiny in the face of global turbulence.
However, not everyone can aspire to this, particularly women, and Evol it there to help. Our story began in 1995 on Quebec’s North Shore at a time when women still couldn’t get credit without their spouse’s signature. Women came together to create the first investment fund dedicated to women in Canada.
Thirty years later, the impact is undeniable: more than $70 million in loans, more than 1,500 supported projects, more than 10,000 jobs created or kept, and nearly 100,000 entrepreneurs contacted across Quebec. It should also be noted that revenue, profits and employment performances for the companies we support and fund are five to ten times higher than for those that do not receive such support. Our approach is financing and coaching. We invest in assets as well as in people. In concrete terms, we take the time to guide them.
Today, we’d like to share with you three key findings based on our experience. First, a lot of women are involved in small businesses. In Quebec, 72% of the economic fabric relies on small businesses with fewer than 10 employees. 53% of the economic fabric relies on small businesses with fewer than five employees. The same is true in the rest of the country. More than 60% of very small businesses are women-owned. These businesses might be small, but their reach is immense. They are the true foundation of our local resilience. They embody the strength of local entrepreneurship and this model is the heart of our neighbourhoods and regions.
Second, we have an under-exploited reservoir of wealth. Women represent 50% of the population, but own only 22.8% of private businesses in Quebec. This gap is not because of a lack of talent, but because of an ecosystem that was not designed by them or for them.
Third, the system is not adapted to new forms of growth. As an example, our evaluation criteria make it difficult to capture the value of entrepreneurship in sectors such as services or retail, where there are a lot of women. These sectors face more challenging financing conditions, because they’re often considered as “risky.” In fact, did you know women pay on average three percentage points more in interest than their male counterparts? A number of studies, which I can provide as reference, have confirmed this.
That said, numbers refute this perception of risk. The number of businesses owned and operated by women that are still in operation after five years is similar to that of men. Women-owned businesses don’t necessarily look for rapid growth at all costs. They look for more moderate and sustainable growth.
To build a stronger and fairer Canada, Evol is acting on multiple fronts. Here are three of them: First, we need to reimagine funding. As an example, we are reducing the interest rate for companies making progress in sustainable development. We’ve developed a unique financial analysis grid that allows us to reduce the interest rate on funding the more the company improves on sustainable development.
Second, we create tools tailored to our clienteles. We’ve implemented measures such as a moratorium on capital when an entrepreneur becomes a parent. No one should give up their ambition because of family responsibilities. Third, we’re working hard to promote small businesses, where a lot of women are involved. We think small business isn’t just a step to big business; it’s a destination. A team of three can lead to a thriving family, a busy neighbourhood, a vibrant region, someone who went from unemployed to creating their own job.
In conclusion, supporting women and small businesses is not just about fairness. It’s a strategic economic choice. It’s investing in a more robust, local and resilient economy. Thank you for your attention. I’ll be happy to answer any questions you may have, particularly regarding barriers.
The Chair: Thank you, Ms. Martin.
[English]
Shelley Kuipers, Co-Founder and Chief Executive Officer, The51: Honourable chair and senators, thank you for the invitation. I am Shelley Kuipers, Co-Founder and CEO of The51.
The51 is a little bit different from my counterparts here. We call ourselves a financial platform and a venture fund. Our focus is to unlock the economic power of women through venture. We do this by activating women-led capital and institutional capital and directing it into women-led companies. We have built three pillars to make it happen — community, capital and capacity.
It’s a community of more than 48,000 across Canada and four funds. The51 Fund I and Fund II have invested in 35 companies; Fund III, with the first close complete, is now imminently deploying. The51 Food and AgTech Fund has 16 investments. All told, we are backed by over 300 limited partners, or LPs, spanning institutional investors, family offices, family foundations and investors. We are coast to coast. With Fund III in hand, we will have exceeded $100 million activated. And side by side this effort, we also build programs that develop the next generation of investors and founders.
When we launched in 2019, we were told not to focus on women. They said, “They won’t write cheques, and there’s no deal flow.” But the data told us something different. My co‑founders — Judy Fairburn and Alice Reimer — and I noted that women were graduating from post-secondary education at higher rates than their male counterparts; the wage gap in younger generations was closing; women were creating companies at a faster rate than ever before.
By 2028, Canadian women are projected to control nearly $4 trillion in financial assets — close to double what they held just five years ago. Yet, only 4% of venture funds go to women. So we are not an “or”; we are an “and,” and we make up 51% of the population, on average. We are definitely not a niche market.
When we built The51, we put community and capital side by side, and this symbiosis turned out to be just what women needed to activate their capital and get on with building a different future for themselves and Canada. We raised our first venture fund with more than 100 LPs because we democratized the asset class. In our words, we invited more women to the table, with a minimum cheque of $5,100 per year for three years. We stopped using jargon and treated women as customers, both as LPs and as founders.
By Fund II, we caught the attention of the Alberta and Ontario securities commissions — in a good way. Far from pushing back, they were encouraged by this democratization and included us in exploring pathways beyond accredited investors, specifically self-certified investors.
We then co-founded the The51 Food and AgTech Fund with Alison Sunstrum and Farm Credit Canada. We proved that public, institutional, private and individual capital can sit side by side. This fund has now become its own venture firm, so, in essence, we have launched another venture firm off of our platform. This is an all-woman team allocating $51 million.
You may think this is interesting: A Canadian bank told us when we were fundraising for that fund, “We’ve already invested in a women-led fund. We won’t be doing another.” That moment told us everything about why this opportunity matters, and again we doubled down.
Today, we’re raising our Fund III, and we say we are focused on investing in women entrepreneurs as an overperforming, underinvested asset class. We have our institutional anchor and a wait list of more than 1,300 LPs across Canada. On June 1, at our upcoming summit in Calgary, we will announce our anchor alongside some of the most influential women in Canada coast to coast as co-anchors.
Our summit is not just an event; it’s a movement. It’s a moment for women with capital and innovative companies in the making. And across our Road to the Summit series, sold out in Vancouver, Toronto and Montreal — yes, we will go to Atlantic Canada this fall — hundreds of women have shown up ready to invest and ready to build in Canada.
But building a fund was not the only story. We built a not-for-profit called Movement51 for investor and founder capacity building. It offers a benefit to the Canadian ecosystem at large and for The51. With just $850,000 in funding — federal, provincial and civic — founders from our founder lab have raised $68 million. Graduates from our investor lab have activated a further $15 million in the ecosystem. This is a return on investment.
Our sister organizations like SheBoot can demonstrate the same metrics, and the real momentum is just getting started. Our community of 48,000 across Canada are women and men — yes, men are welcome — consumers, customers, experienced advisers, C-suite and executive professionals, board members and future investors and founders. We made the tent big.
My first investment in 1998 was in energy. I didn’t come from money. I didn’t graduate from university, actually. I’m not from finance. But with that investment, our family made money that we never thought we would. We took that money, and we put it back into the communities that we lived in.
There is a company called Solium, a nearly bankrupt Calgary company that couldn’t make payroll. A bunch of us in Calgary invested our capital, time and energy, and in 2019, Solium sold to Morgan Stanley — yes, a U.S. buyer — for C$1.1 billion. It was a unicorn exit. It was the largest fintech acquisition in Canadian history at that time.
What happens when we win as founders and investors? We turn around and we reinvest. My family and I put more than $25 million back into the ecosystem, into early-stage entrepreneurs. It’s the compounding power of this flywheel.
Here is The51’s ask. First, create structural tax incentives — investment tax credits across the country that are consistent and capital gains deferrals when reinvested, especially when reinvesting in your own community — that activate the large pools of private capital sitting on the sidelines, for example in family offices, foundations and private wealth, and direct them towards Canadian entrepreneurs and innovation. Private capital needs to drive the markets.
Second, modernize securities regulations to open up private capital markets to more Canadians. Today, The51 cannot legally promote its investment opportunity — we’re not allowed to do that — so we are excluding a part of the market from participation. We need to fix this.
Third, we need to fix the institutional minimums that bypass emerging managers like ourselves, not because of track record but because of size. We need to mandate or incentivize emerging manager carve-outs in Crown-adjacent funds like BDC, EDC and PSP — a dedicated allocation specifically for some sub‑$100 million funds. Some U.S. pension systems already do this, and I think we are already seeing examples of this here in Canada, in Quebec, through the CDPQ and the Quebec Emerging Manager Program. It’s time to make this a national standard, not a regional exception. If the largest pools of capital in Canada only flow to the largest managers, we’re permanently locking up the next generation of fund builders and the entrepreneurs who depend on them.
We want the government to be a catalyst, to crowd in capital, to build the policy and regulatory on-ramps and then get out of the way and let markets decide. Today, 95% of The51’s individual LP capital is women’s capital, yet a 2025 study by Canadian Women in Venture Capital found that only 50% of Canadian VCs now have at least one woman partner, and only 15% of these firms have more than one at the general-partner level. We are trying to change that.
Women’s capital and ingenuity can be one of the most formidable economic unlocks this country has ever seen. The bottleneck is not appetite — there is appetite. It’s architecture. We are inviting women to this table to do exactly as we intended, to unlock the economic power of women. Thank you.
The Chair: Thank you, Ms. Kuipers.
The opening remarks were more than five minutes in two out of three cases, but since we have an in camera portion after the first panel, we can have some flexibility. I propose a round table of questions of five minutes each, but first Senator Henkel would like to disclose something. You have the floor.
[Translation]
Senator Henkel: I just want to inform my colleagues that a few years ago, I worked as a strategic advisor for Evol, which is part of this panel, for over five years.
I’ve consulted the Senate Ethics Officer on this. Out of an abundance of caution and to avoid any risk of impropriety, I won’t ask the Envol representative any questions.
The Chair: Thank you, Senator Henkel. You can question the other witnesses, though.
Senator Henkel: Absolutely.
[English]
Senator Fridhandler: I don’t know where to start. There is so much that you’ve raised today.
Ms. Kuipers, I can start with some simple questions. You gave us a few recommendations, and I’m looking for solutions. I think I understand the issues, and you have given us a bunch of information.
In terms of modernized capital markets, the commissions, in recent years, have permitted some degree of self-certification to get us around accredited investors and to democratize the marketplace. I don’t want to be glib, but how might we expand those self-certifications? Maybe we can craft them so that they are self-certified to specific instances. They are more prone to do what you need to get women into the marketplace. Self‑certification: I’m a woman; therefore, I get to invest in a woman’s fund. I think there should be a baseline where the regulators shouldn’t interfere.
We had earlier witnesses who said people get to play in future markets, crypto-currency and slot machines, and we don’t regulate that foolish money. You should be able to have some level of risk. Can you comment on capital market modernization?
Ms. Kuipers: Yes, it is a great question.
Like I mentioned, the securities commissions came to us because typically a venture fund is fewer than 50 LPs. There’s no actual regulatory recording with a venture fund because, once you’re over 50, then you have to do your reporting. In doing that, they saw what we were doing. They thought that this was very interesting, so they invited us onto their advisory council in Alberta. We have been collaborating with Ontario as well.
It is a very simple implementation. I don’t understand why it couldn’t be expanded to other jurisdictions. You have to basically say that you come from a specific industry. You have to limit the amount of capital that could go. So I think it is $10,000 a year. That is a limit.
For us, as fund managers, we have to get to a certain size in the fund before we can accept self-certified investors. It is a pretty simple implementation. It’s in Alberta and Ontario. I would like to see it expanded across Canada.
Senator Fridhandler: Are your funds generating competitive returns to other market funds?
Ms. Kuipers: Yes. We are in the venture business. That’s like a 10-plus-2-year time frame. It is a long time. We started with venture because that is the industry that we came from.
We want to be able to introduce loans to women’s companies as well. There are other financial products that we want to be able to do.
We have unrealized and realized returns in our earlier fund. We have markups across our Fund I and Fund II portfolios, likewise for the Food and AgTech Fund, but it is a long-term investment. Basically, your money is in the fund over the first three to five years. Then we’re harvesting the returns on the back half of the fund.
Senator Fridhandler: Ms. Martin, I think I understand that Evol is primarily a lending fund, not an equity investment fund. What is the source of your loan capital? Where do you raise your capital from?
[Translation]
Ms. Martin: We work with partners: Capital comes from both the Government of Quebec and the federal government. There is the BDC — I’ll come back to them — the National Bank, Fondaction and the Fonds de solidarité FTQ. They helped us raise close to $60 million.
Why is a bank working with us? Because, generally, banks are not in a position to support small loans. It’s quite expensive for a bank to support an entrepreneur when it authorizes a small loan. We spend an enormous amount of time supporting our entrepreneurs. The model works, because the two levels of government that fund our operations support it, but we can also raise capital from major Canadian financial institutions.
[English]
Senator Fridhandler: Ms. Cobb, a short question. You spoke about mandates. You specifically referenced BDC with a side reference to banks. How about pension funds, which actually are managing our wealth, a big chunk of it? Recently, we’ve seen some publications on the fact that they shouldn’t just be focused on returns but should be focused on a national growth mandate as well. What are your thoughts on that?
Ms. Cobb: Well, our pension funds, that is our sovereign wealth fund. It belongs to Canadians. I don’t see the risk that others might see in deploying it in Canada.
I think what we have to solve for is a scale problem. Capital has a tendency to concentrate and aggregate away. It doesn’t really like to hang around and work in small pots. So the business of making capital smaller and building the plumbing for it to flow is the essence of what we’re all trying to solve for.
I look at the people who run our pension funds and our banks. They surely look like smart people. If they were asked or told to actually build investment vehicles, or plumbing, to match the country we are, which is made up of small- and medium-sized businesses — 98% percent of businesses — and communities of every size, they’d have to solve two things at once. But that is only two things, not a hundred things. Solve for geography and scale.
The vision that we have for Canada from where we sit is we have to become masters of all scales — big, small and everything in between.
The Chair: Thank you.
Senator Wallin: I want to say a particular thank you to Ms. Cobb because I think you may have given us the title for our report with your term “a country of stranded assets,” because we have heard this message repeatedly. Thank you for being so crisp on that one.
Could you share your views — I know we’ve heard them, but this sense of there being a different attitude toward women when you actually go into a room to talk money? I’m particularly interested in the regional. I come from a small rural area. My sister and I decided to start a hairdressing salon about 30 years ago because the hairdresser had passed away. We went to the bank for $5,000 to renovate a business, and they said no. We were both gainfully employed.
Yes, Ms. Kuipers, you might have some comments too. Briefly, can I hear about your gut reactions to these things?
Ms. Cobb: My career was in business. I was the chief financial officer of a publicly traded company. I spent a lot of my time in capital markets. For certain, there is a difference, depending on whether you’re a male or female, walking into those rooms.
In communities where I have spent the last 20 years, women — and I think it has come out in all the testimony you’ve heard here today — seem more inclined to stewardship and community stewardship, and I think they take a very long view of what success looks like. Yet, those same institutions are not built for that.
Senator Wallin: Yes. I think that is an important point. I think it was Ms. Martin who commented on this — that you have a different view about profit and longevity than your male counterparts.
[Translation]
Ms. Martin: Absolutely. In fact, funding models aren’t designed to support sectors coveted by women. You give the example of the hair salon, and that’s a perfect example. Yes, they make profits, but they’re also part of the community’s foundation. The hair salon increases the economic vitality of a commercial hub. It offers a forum for discussions and meetings. That’s what I find deplorable about the reports we’re asked to produce. Because of the way small business performance is calculated, the only things we talk about are revenues and profits. The whole socioeconomic dimension is forgotten. Women are very focused on businesses that play more than an economic role. That’s why Evol exists; that’s our mission.
[English]
Ms. Kuipers: Well, there are biases in the system. As I said, if 4% of venture funding goes to women, you have to go back in the system and say, “Okay, well, who is making the investment decisions at the investment committee?” That is one thing I would say.
What we are trying to do is we are trying to leverage that same bias. So women are two times more likely to invest in a woman than a man, so we are taking the same bias and replicating it. We often say you invest in what looks like you. You invest in your own lived experience and your own understanding. That’s why biases exist in the existing system. And that’s why we’re trying to create another system, side by side.
Senator Wallin: Thank you.
[Translation]
Senator Henkel: I have a very simple question for all of you. Each of you has clearly succeeded in your respective sector. Since you’ve been around for a number of years — and this is nothing new — you are also showing us the relevance of finding different ways to engage with the small- and medium-sized business sector, particularly women-owned businesses.
My question is this. Have you met with government organizations and decision-makers so they can take action based on your evidence, your figures and your statistics, which make sense?
If not, why not?
[English]
Ms. Cobb: Let’s talk about the Fogo Island Inn and the suite of businesses around that. They are largely a part of the tourism and hospitality sectors, which, as a general comment, do not get the respect, perhaps, or are not understood as the GDP drivers they can be. Canada underperforms its OECD colleagues in tourism as a percentage of the total economy because we haven’t built in the enabling conditions to be successful. We don’t treat it as the serious business that it is, and we forget that trade follows tourism.
My experience in that particular sector has been, I would say, fairly dreadful across the country, in talking to entrepreneurs in the tourism sector. We’ve had situations where even some RDAs — not all but some — won’t lend to tourism operators.
There is a lack of understanding there. You see the same thing in transportation planning. We are the only country in the OECD that doesn’t have a regional air access strategy because we are subpar-optimizing and not looking at the whole. There is listening, but there is a tangle of knots in the institutions that we all need to work on together.
Ms. Kuipers: It is a great question. I would say that The51 hasn’t been particularly strong at navigating those rooms. We’d like to be better at navigating them. But I think our observation at the federal and the provincial levels is that women are often relegated to, like, the social file or the women’s affairs or the women’s social impact or the women’s — whatever we call that file or that cabinet. We really want to be in the economic file, or we could be in both. I think what we’ve heard today is that we want to be in both.
The things we are doing have social impact, so we want to be impactful and socially responsible in the communities we’re investing in, but we also want to be recognized as an economic powerhouse in this country. We don’t command the rooms that way. We command the rooms as a social file.
[Translation]
Senator Henkel: I asked one of our guests what are the real barriers that might explain why women still do not have enough access to venture capital. They said it was because women are not networking enough. I’d like to hear your thoughts on that.
[English]
Ms. Kuipers: No comment. We’re very avid networkers. We’ve got a community, and everyone here has a community.
Senator Henkel: You are the proof that you do have the networking, but this is—
Ms. Kuipers: When we set up the community, we were told that it was something really nice that we were doing. The nice ladies were doing something nice.
Senator Henkel: Thank you.
[Translation]
The Chair: That observation was made by a well-respected woman entrepreneur in Quebec.
[English]
Senator McBean: It has been a pleasure listening to you while we’re actively taking notes. I want to say, Ms. Kuipers, it’s a pleasure to speak with you because we sat beside each other on the plane the other day, and I feel like I wasted 40 minutes.
I’m wondering what kind of demand you have for your funds. Yesterday, we had the Senior Deputy Governor of the Bank of Canada here, and I was asking her if there was some way — I am making things up as I go — that we could take some away from the top of the pension funds and have that reinvested into growth at the bottom.
She suggested that it wasn’t actually a supply issue of credit and capital, but it was a demand issue. When they look at government entities, such as the BDC, they are not being tapped out. In conversation later, I clarified this with her. We met with her and clarified it with Senator Henkel. Senator Henkel pointed out that this is often the result of the challenge of the process. It is just a barrier for people getting there.
I’ll let you all speak about the type of demand that you’re seeing and then the challenges to accessing the government-provided capital and credit in there.
Ms. Cobb: I actually saw that remark, and I think we must just live in different realities. If you are in communities across the country, the demand is palpable. You just need to talk to people, which we are apparently pretty good at.
I can name off the top of my head dozens and dozens of stranded businesses that are looking for something as simple as an operating line — just a small operating line of $50,000 or $100,000 — just to bridge the gap between money coming in and money going out. That is not available from their commercial banks. Credit unions are there, yes, but they are asset-based lenders, and many people in outport communities in Newfoundland don’t own their own houses or don’t own houses that are recognized as valid for a mortgage. So they are stymied there.
In our own enterprises, we have a lot of experience working with BDC because they were a part of the whole COVID loan situation. By the way, two thirds of the small businesses in our country still have COVID loans. Many of them have been turned into more expensive debt than what they were originally. It is very complicated to borrow from BDC, and it’s very expensive. This is the maniacal part of it; BDC, as a lender, is, I gather, forced to charge higher-than-market rates because they are not to compete with the banks. But the banks aren’t there.
There is something really wrong in this whole logic. It’s expensive, and it’s complicated. The Community Futures offices follow a similar pattern of expensive loans.
Senator McBean: I want to hear from the other two witnesses, also.
Ms. Kuipers, I know you have the ag fund, working with the FCC. How does that work? Is that easier? And, also, what kind of demand do you have?
Ms. Kuipers: You’re talking about demand, like entrepreneurs?
Senator McBean: Entrepreneurs who are looking for capital and credit.
Ms. Kuipers: There is obvious demand. We have seen more than 5,000 entrepreneurs at The51 since our inception. We probably get three to five “reach-outs” from women entrepreneurs across Canada every day. There is definitely demand.
I’m not saying that the entrepreneurs who reach out to us are necessarily fit for our vehicles. We work collaboratively with the ecosystem to ensure we can direct them to the places where they can get the financial support that they need, but, no, there is demand.
Senator McBean: And when they come to you, do they share any war stories of their access to the government? I can’t put words in your mouth, but can you tell me what they are telling you?
Ms. Kuipers: Yes. BDC does have the ability to ask for personal guarantees for their loans, which can be really hard for entrepreneurs, especially in tough times. I would say that is one example.
But I would go back to the premise of what I said at the beginning: You invest in what looks like you. When you find yourselves in rooms of men, they don’t have the same resonance with what you’re building, first off, because of who is building it and then, second off, because of what is being built. We just really try to break that down.
We hear lots of entrepreneurs coming to us, telling us their war stories of what they have experienced on the road, and it’s terrible. In some cases, it’s not appropriate at all. But I would say that there really is a gap in that early-stage funding kind of spectrum for women to get loans and for women to access equity financing. The systems are just not built for them. For example — and now I’m rambling. I will get cut off.
Senator McBean: I need to use my time to ask Ms. Martin to also respond.
[Translation]
Ms. Martin: Actually, it’s important to remember women entrepreneurs take one of two positions. First, there are those who want moderate growth. That’s very good, and there are a lot of loan applications to open hair salons, for example, or coffee shops in the regions. Otherwise, our organization wouldn’t exist; we’re the ones who get the money out every day.
Second, there are those who want rapid growth, where you need venture capital. The demand is there, but the need for support is greater, particularly to scale up these women’s projects. These women don’t always turn to funding because it’s too expensive. Instead, they’ll dip into their personal savings—studies have shown this—and always end up asking the bank for three times less money than a man would—this has also been proven. We need to support these women entrepreneurs to help them grow. Some want it, and that’s fine; you have to be there for them. Others prefer what I call “specified growth” and stop there, and that’s fine too.
The Chair: Thank you.
[English]
Senator Loffreda: Welcome to all our panellists. I have a general question. Canada represents roughly 1.5% of global GDP. If you dig deeper, those numbers are 1.2% or 1.3% today. We cannot compete on size alone. Should our SME strategy focus more deliberately on niche global leadership sectors where Canada can truly differentiate itself?
I’ll ask the question to Ms. Kuipers. For example, you mentioned 4% of venture funds go to women. How do we improve that? Why is that the case? And I go back to Senator McBean’s question about whether it’s a question of supply or a question of demand and how we can improve that. Because you did say private capital needs to drive the markets, especially capital markets. So what have you seen, and should we focus on more specific sectors to promote that?
To Ms. Cobb, exactly to the first question I said, should we rethink some models to develop more regional play and not just try to compete globally when we are 1.2% of the global GDP? Should we not rethink some of those models and bring in policies where we say that specific regions need more focus, and here is what we can focus on to improve the quality of life for Canadians and our entrepreneurship?
[Translation]
Finally, Ms. Martin, you say we often work on our weaknesses, but how can we work on our strengths? If you work with the weakest member of a team, you get worse results than if you work with the strongest member and make them even stronger. I’d like to hear how we can work on these strengths. You have a large bank that contributes to your fund and you’ve had a lot of success.
[English]
What policy can we change today that will make a difference, from what you have seen? That is a lot to put on the table. Maybe a second round. I want to give everybody a chance, especially on your birthday, Mr. Chair.
Ms. Kuipers: Going back to the 4%, it is 2% globally, and 4% in Canada, so that is good. We are maybe ahead of the mark. But what I would say is it is the whole system, and that is why we designed The51 the way we did.
We said if it is 4% or 2%, we have to go back in. The first thing is whether the deal flow is getting to these firms. And then if it’s getting to these firms, how is that deal flow getting vetted? And then how are those investment opportunities being presented to the investment committee or the partners? And then where does the LP capital come from?
So we went all the way back in and said we’re going to have an all-woman team, and we’re going to vet from our perspective. Our investment opportunities are vetted by us; our investment committee and our partner group are all women, and then 95% of our LP capital on an individual basis is women’s capital. We have changed the whole system inside.
That being said, we have institutional capital at the table now, and they are coming in because they want to invest in women. So we have kind of re-architected that. That was not 30 seconds.
On the specific sectors, in our Fund III, we’re investing in three things: health and wellness of myself and my community; finance and wealth, so financial services directed at women, designed by women; and the third bucket is work and industry. What is the future of work and industry in Canada? Those are the three areas we looked at and said they are extremely important to women, and that is what we’re going to invest in.
Ms. Cobb: So, 1.5% of global GDP is a very small number for a very big country. I think our biggest challenge is a mindset challenge. I actually think we don’t love the country that we are. We have this sort of idealized idea that we’re going to grow giant companies that are going to save us. And I worked in an industry and saw Nortel come and go, just as an example. I am not saying we are not good at building and sustaining and holding on to big companies, but I can’t think of any examples that are not regulatory monopolies.
So, if we start with the country that we actually are — 5,000 communities — you can count on one hand how many of those communities are more than half a million people. Starting with the country we are, let’s fall in love with our geography and use the considerable skill sets and mindsets we have and the tools of technology now to actually build frameworks that support big, small and everything in between, whether we’re talking about communities or we’re talking about businesses.
The issue of investment — investment is a wonderful thing, and we should go out in the big world and bring home as much money as we can to invest, but it will do us no good at all if we can’t figure out how to turn that into actual development in actual places where actual people live.
The Chair: Thank you.
[Translation]
Ms. Martin: I’ll talk about the strengths and policies that need to be changed, if necessary. In terms of strengths, it’s been proven they’ve been able to get money from partners like banks, as you pointed out. It’s interesting, but those kinds of partners shouldn’t think they’re going to make money from these funds. The banks’ purpose and motivation should be the impact of that loan, because if our partners lend us money at too high a cost, we can’t lend at an affordable cost.
The model works because these partners understand we’ve been able to have an impact at an affordable price. That’s something that could be strengthened; we’ve managed to convince a number of them. The results are there.
As for the whole political dimension, as I was saying earlier, I think it’s important to review the performance indicators we’re required to submit to look beyond income and profits; adding a social dimension would speak to women. Generally, we need to rethink the way we set rates. The higher the rate, the more stifling for the entrepreneur.
I understand very well the logic of risk and return. We need to review all that. We’re not helping our entrepreneurs with 12% rates or 15% rates. We need to rethink how we set rates. Finally, small businesses, and especially women, cannot afford technical, legal, marketing, or financial expertise. They need tangible support.
The Chair: Thank you.
[English]
Colleagues, it is already 11:30. Initially, the meeting was supposed to be limited to one hour, but if you are able to stay for an additional 15 minutes, we still have three senators and my own questions. Basically, if you are able available for the next 15-20 minutes, we will squeeze a little bit into our in camera portion — the second part of this meeting — if people agree.
Senator Yussuff: Thank you all for being here.
I’m sitting here and I’m kind of scared that I’m going to ask you the wrong question. But I have to overcome my fear and do my best.
This is very rich, because it’s telling a story of what is so wrong about our country, where we believe we have a very healthy financial system that is supposed to meet all needs, and yet you’re telling a story that is very different. That’s not the reality. You figured out a way in your own ways. Granted, it’s regional and unique in its operation to figure out how to try to make something that could serve the interests of women, but the model speaks to the bias that is built into the system. If we don’t change that model, we will be talking about this for the next hundred years. You’ll come back and tell me that we still have to do the things we’re doing because the system hasn’t changed.
We are looking at the system. How do we fix the system so that it could be much more equal right across the country and, at the same time, support the uniqueness in what you’re doing? You figured out in your own way that you have to build something different to meet the needs of our community. In your case, in Fogo Island, you had to create something.
In Quebec, it has been unique. Quebec history has been about regions, so they have a clear understanding that regions are what make up Quebec. It’s their strength. But that’s not the norm across the country.
I don’t want to ask you a specific question. I want you to tell your own story as to how we fix this system that is so inherently biased. Women are more than half of the population in this country. We don’t even have women of colour here or Indigenous women to tell their own story, which would magnify the problem even more deeply.
Ms. Cobb: I’ll start, and I’ll take less than a minute. We’re talking about three different kinds of biases, and I’m going to let Ms. Martin and Ms. Kuipers talk to the gender bias.
I’m advocating for systems that adapt to serve wider geographies, the whole country, and also systems that can work on different scales.
You could talk about, say, the Infrastructure Bank. Its smallest loan size, unless it’s an Indigenous community, is $10 million. We wanted to put a little electric bus on Fogo Island that would cost $1 million. They wouldn’t lend us the money because it’s too small. So we build for the big, but we can’t service the small, and we certainly can’t service the far away from the financial centres.
[Translation]
Ms. Martin: Thank you for your question. I think to fix the system, the support for initiatives like ours need to continue. Obviously, results need to be achieved. We need to find the right partners. We need funding and we need to find partners that have the same social impact values we have. We need to value small businesses. We talk a lot about big businesses, but I think we need both to build a prosperous world.
Let’s not forget small businesses play a key role in supply chains. We need to promote small businesses in all adapted programs communications. The focus is still very much on big businesses. That’s great, but let’s not forget the others, as they are the bedrock of the Canadian economy.
[English]
Ms. Kuipers: I have so many thoughts on this. The approach that we’re trying to do at the The51 is system-related. We know that if women have their health and well-being, they can be working in the workforce. They can be innovators. They can be entrepreneurs. We know that, by doing that, they will have the opportunity to create economic security for themselves, for their families and maybe have an opportunity to create wealth for themselves.
We’re very focused on ensuring that women’s capital is coming to the table. It is explicitly invited. It’s amazing how many times we hear from women who say, “Well, I’ve never been invited to invest. I have been invited to give my money away, but I’ve never been invited to invest.” We explicitly put this invitation out all the time.
Likewise for the founders. We want to ensure that the capital comes to them to really liberate their vision and mission and opportunity and create wealth for them on their cap table. Then again, as successful investors and founders, we will go back and reinvest into our community.
I feel like we’re doing it from the grassroots level. We could have waited for the venture system to do it. We could have approached the problem differently. We just said, “You know what? One woman at a time.” We started with 75. We’re now 48,000.
The Chair: Thank you.
Senator Pupatello: Thank you all for coming.
Ms. Cobb, your comments around regionality of the country are very interesting to me because I think it impacts our airports; our airline services; the Trans-Canada Highway, which really is the ferry that takes you to Port aux Basques. It’s quite interesting how much people have to pay to finish the Trans-Canada Highway and just get there.
In particular, in Newfoundland, when Scotiabank decided to pull so many branches out of the province, and then we watched how long it took for Atlantic Edge, for example, to land in your hometown — I don’t know its success at this point because it has only been a couple of years — I marvelled that even though there was a massive protest against Scotiabank, with people saying, “How could you pull out and leave us all hanging?,” they never retracted those decisions. You were right to point out that the decisions are all in credit bureaus in downtown Toronto for these towns that are making business people in those small communities.
How do you change that when we probably don’t have too many rural people sitting on the board of Scotiabank or TD or any of the big banks? Even the credit unions — they are like co‑ops, so their people really are their members. Where in a system of banking — a credit union or a bank — would you either insert more regulation, of which, of course, they think they have too much now, or how do you get them to risk at a higher level? Where in that system? I appreciate your comments, but where in the system do you change it?
Ms. Cobb: There was an article in The Globe and Mail yesterday about a place called Brussels, Ontario, where a bank left. The articles often miss what I think is actually the main point. I mean it is a terrible thing when the branch leaves, and we lived through that on Fogo Island, because there are a lot of cash businesses, and a lot of people still go to the bank for lots of reasons. But that can be overcome if you have the internet, which many of the communities across the country do not have.
What is often missed, though, is commercial lending leaves. Now, usually the commercial lending function has left that bricks-and-mortar building long before the branch closes, but the absence of commercial lending is the real killer to SMEs.
I think the point of intervention has to be to say, “If you wish to be registered as a bank in our country, you have to serve the country,” or we have to do what Germany has done and develop a different kind of bank, a public bank or regional banks or something that actually serves the vast number of communities that are suffering from a lack of access to commercial lending.
This failure to start thinking about our country, whether we’re talking about transportation or finance, failing to start with the geography — because that’s the way to organize everything — and ask, “What is needed here? How do we create the enabling conditions for success?” Canadians want to contribute to their economy. I can give you horrible examples of air access. That beautiful inn, which is world-renowned, hangs only on one flight. If that flight is gone, it’s gone.
Senator Pupatello: Many places in the country are in that same position.
Ms. Martin, you mentioned that what collects your fund together is you have some provincial and federal funding. Do they obligate you to have a certain return on that which you need to meet? Is that how the National Bank participates in your fund — because they are sharing the risk with the federal and provincial governments — or would they simply not participate if you didn’t have government funding in your fund?
[Translation]
Ms. Martin: That’s correct. The way it’s put together is interesting for two reasons. The risk is shared. There are many stakeholders, but it’s not free, meaning these partners loan me money at a relatively low cost—otherwise, once again, it wouldn’t work—and I can lend that money myself. Why are they doing that? It’s good for them that small businesses can survive. They might be future customers.
It’s still good to be able to convince financial institutions to invest part of their funds in impact programs and take a certain risk. Ultimately, however, because of the way it’s put together, the guarantees come from the governments. I don’t think the partners really take a lot of risk.
[English]
Senator Pupatello: I did wonder about those percentages. Because at Nortip, for example, in Newfoundland, which I’m more familiar with, the percentages are huge. The cost of the money is high. I don’t think people realize. Oh, BDC, they are very expensive. People would be shocked to know how much we charge, considering it’s a government-backed fund. In this era of under 5%, everything is really expensive. I suppose if you were in the 1980s when it was 20%, you would think it was cheap.
Are you mandated to those similar-type percentages with that government money? Are you north of 10% in those loans?
[Translation]
Ms. Martin: No. On average, our loans are at less than 10%, because we’re a non-profit organization. We don’t have a performance target to meet. We lower the interest rate as much as possible so our entrepreneurs can afford it. That’s because we’re a non-profit and we don’t have a 20% profitability target on the fund.
In fact, our goal is not to lose money. Even if we lost some money, the risk would be worth it. That’s also part of our values, but the objective is not to lose any or gain any when putting things together.
[English]
Senator Pupatello: Ms. Kuipers, do you have any comment on that?
Ms. Kuipers: No, I don’t.
Senator Pupatello: Because you have also had a bank join your —
Ms. Kuipers: We have a not-for-profit, but we don’t do lending from the not-for-profit.
Senator Pupatello: You also mentioned that one of the big banking institutions also joined your fund recently.
Ms. Kuipers: Yes. So we do have an institutional banker, a bank, that has anchored our Fund III.
Senator Pupatello: I guess they’ve come in now that you have sort of proven yourself. Now they have decided to come.
Ms. Kuipers: Yes, kind of. I would say they’re attracted to — I wouldn’t say anybody is really attracted to venture funds these days. You know, they are really not in favour. But we also see it as a tremendous opportunity because it’s a great time to be an investor.
They are really attracted to the community of women that we have amassed, right? Again, looking at the wealth transfer coming, how are banks going to service women? So alignment and collaboration with us, in addition to investing for a return, is why they are at the table.
Senator C. Deacon: Thanks to the three of you for being here. There have been a lot of frustrating and upsetting meetings in this study. This is not one of those. It’s full of opportunity.
We have to change Canada’s industrial policy quite significantly. Since the 1980s, we have had an industrial policy that favoured corporate consolidation and bigness. It stems right across the whole of government. Our Competition Act was changed in the last number of years to start to balance and level that playing field, but that’s only when it comes to mergers and acquisitions. It hasn’t changed how all the other policies, regulations, programs, funding and procurement function right across the whole of government.
There is a cultural change that I think we need to see in the federal government, particularly in senior decision making in the city of Ottawa. This is tough because all those practices are embedded through the organization. They are a real culture. People’s careers depend on adhering to past rules. Our most powerful lobbying voices, the most influential lobbying voices, work to preserve those rules because that’s how their profitability is built.
There is no question in my mind that this change needs to happen. It’s something that, for eight years now, I’ve been railing against in just about every point. Help me understand: What is our beachhead to start to begin this fight? What is our D‑Day battle that we should really fight for to start to move and be able to spread out, because that’s the way I’m looking at this? If we could start with you, Ms. Cobb, and perhaps move to the others.
Ms. Cobb: Maybe we need to get together with a giant map of Canada, and we’re going to put all the 5,000 places — 5,000 incorporated communities; many more are not incorporated — and we are going to put all of the small- and medium-sized enterprises that are in the country and where they are.
Underneath that, we can — because everything starts with geography — then mark out the obstacles that each of them faces, and I think you’ll find a lot of commonalities in transportation, internet access and access to financing. Then we are going to take that map, come back here and figure out, “Okay, what do they need, and how do we solve for it?”
That is Canada’s opportunity — how to solve for all scales and stop dreaming about how everything is just going to be big, because we mistake big with easy. We forget that humans, including Canadians — at least all the ones I know — are embodied, social, meaning-seeking creatures. They have to live in a place. Toronto is a lovely place, but I don’t think they want us all coming.
[Translation]
Ms. Martin: Thank you for your question. I think there should be a national forum on small business and the place of women in small businesses. We need to invite the leaders of the big banks and big funds to the table to increase their interest in small businesses. Again, the world needs both large and small businesses. We need to bring decision makers together and, ultimately, we need leadership. We have to find people who can make the right decisions, as you say, within governments or large corporations.
[English]
Ms. Kuipers: A great question.
I don’t know if this is The51’s perspective. We talked about places, but I also think we have to talk about the economies in these places. It could be energy on one end of the spectrum; it could be Shopify on the other end of the spectrum. We should really recognize, acknowledge and celebrate the collective economy that we have. Stop always putting barriers up between them and going, “This one is a villain. This one thinks too highly of themselves, and it has too much influence.” The tech bros are the tech bros.
But I find that talking about the economy is so divided in Canada. I don’t understand that. If we could just say, “You know what, let’s unleash energy and tech and food and ag tech.” Could we not come together, just like we’re doing in celebrating or acknowledging our places, and celebrate our collective economy? Why are we, even in the media or in rooms, saying that one industry is more important than the other or one is better than the other? That just needs to stop.
For a beachhead, I would say we need to get back to celebrating Canada, who we are and the businesses that we have created and fully liberate the ingenuity that is inside of these and become what we can become.
Senator C. Deacon: Communities without businesses don’t exist.
The Chair: Thank you.
Ms. Cobb: A country without communities doesn’t exist.
Senator C. Deacon: Exactly.
The Chair: Thank you, senator.
I refrained myself from interrupting this conversation. The bad news, for me, is we have extended our time. My question was for Ms. Martin, but I have known you for years. I’m able to reach you. I know Evol, because before it was Femmessor; when I was Minister of Economic Development, we worked with you. Congratulations on what you are doing. The survival rate is much higher when you compare it to the national average with the company you follow. I congratulate you on that. It’s more of an observation than a question, by the way.
I think that Senator Yussuff summarized pretty well, even my own thinking, because we think in this country, with well-capitalized banks and so on, people who have a great idea will have access to credit easily. You proved this morning that, no, it’s not exactly so.
I want to thank Senator Henkel, who insisted that we needed a panel with women representatives, because this is an angle that we have not really explored before today. So it was very important and very informative. I know you have a busy agenda. We thank you for being here in person, as well as for your flexibility to extend a little bit the panel.
Colleagues, we will move to the in camera portion. Thank you.
(The committee continued in camera.)