Sladden, along with five other former Twitter employees, started the female-led investment group #Angels to help increase early female leadership and employment at startups, while also boosting VC investments in women-run companies. In February, the group published a post on Medium, titled #TheGapTable, in which they called out Silicon Valley for its failure to represent women on the cap table, (the document that records a company's ownership stakes.) The post inspired Carta's study.
The founders of #Angels believe that a lack of women owners, senior executives, early-stage employees and investors all contribute to the equity gap. And according to Carta's data, that outlook is backed by statistics. Currently, women represent 29 percent of employees in companies with up to 10 employees. Once a company has over 500 employees, female representation increases to 44 percent.
Jana Messerschmidt, #Angels co-founder, emphasizes that early employees of small private startups tend to get the largest share of employee equity, at the lowest price. Once that company successfully goes public and its value increases, that equity easily turns into a large lump sum of money. If more men than women are hired at these young companies, the wealth created from employee equity is distributed unevenly to one group of people.
Messerschmidt says that early in her career she made the mistake of focusing more on her salary than her slice of a company.
"I started out as an engineer and worked my entire career in tech," she says. "My first job at a startup gave me equity. The offer letter said 'Congratulations we are giving you X salary and X number of shares.' I had no idea about asking what percentage of the company I would own or any of that. But in hindsight, I wish I would have, because that company ended up going public and I could have had a lot of money from owning more shares."
In addition to hiring women early, Carta's study calls on Silicon Valley leaders to help close the equity gap by eliminating discrimination and bias in the investing process.
Research conducted by Harvard Business Review in 2017 found that male and female co-founders are asked different questions by venture capitalists that can alter how much funding they receive. For example, male entrepreneurs are often asked by VCs about their potential for gains. Meanwhile, female entrepreneurs are often asked about the potential for losses. Women receive seven times less funding than men do, making it far more challenging to grow and scale their companies.