A recent study by Carta found major gender discrepancies in venture-backed company ownership. While women make up 35% of equity-holding employees, they hold only 20% of employee equity. And for founders it’s even worse: women make up only 13% of all founders but own just 6% of all founder equity value. When startups are successful, earnings from equity dwarf employees’ salaries, making this issue even more critical than the gender pay gap.
On average a woman earns 80 cents for every $1 earned by a man, but when it comes to equity, female founders own just 39 cents for every $1 a male founder owns. “You don’t need a business degree or have to work in Silicon Valley to understand how important equity is to driving wealth,” said Chloe Sladden, former Twitter executive.
A number of factors may be contributing to this equity gap for women: lower startup valuations, less capital, investor bias, negotiation, and the list goes on. The founders of #Angels, a female-led investment collective, believe the equity gap starts from the early stages of every startup. These companies lack female owners, senior executives, early-stage employees, and investors. And Carta’s data support their hypothesis.
Women represent 29% of employees at companies with 10 or fewer employees, but that representation jumps to 44% when companies have over 500 employees. “The equity you get from successful startups is your ability to vote and choose what the future looks like. And if only one group of people get to do that then that is not good,” said Sladden.
But this data doesn’t mean the equity gap cannot be bridged. After seeing their own research, Carta’s CEO Henry Ward noticed similar discrepancies at his own company and took action. Ward confirms that this year 48% of his company’s senior hires have been women, and they have plans to add the first female independent director to their board.
This study is just the first in examining the effect of gender on equity, but further research will be necessary to examine race, intersectional identities, and self-identified gender. The first step is identifying the gap, the next step is fixing it.