Closing The Gap

Why women own less start-up equity in Silicon Valley

Just one in eight start-up CEOs are women and the most highly compensated executive roles continue to be dominated by men.
Thomas Barwick | Getty Images

Women working in Silicon Valley start-ups own just a quarter of the equity of their male colleagues, according to a report by software platform Carta.

The study, called "Table Stakes," found this was due not only to there being fewer women in senior roles but more specifically the executive roles predominantly occupied by women, chief marketing officers (CMO) and chief operating officers (COO), were awarded less equity by the companies they work for than other "C-suite" positions.

This is the second gender equity gap report by Carta, which gathered data on equity ownership from more than 25,000 founders and 320,000 employees, in over 10,000 companies in the U.S. earlier this year.

The report highlighted that both female start-up founders and employees owned just 26 cents of equity for every dollar held by men.

Women made up a third of the participants in the study but held just 11% of the total equity wealth.

Just one in eight start-up CEOs are women and the most highly compensated executive roles continued to be dominated by men.

Chief marketing officer was the executive role where women were the best represented, at 32%. However, CMOs were the worst compensated in terms of equity of all executive roles, receiving an average two-fifths less than CFOs.

Finance roles saw the biggest boost equity reward between lower-level and C-suite jobs, increasing by 26 times, yet the number of women in this area plummeted by 70% as seniority increased.

Women accounted for less than a fifth of engineers in start-ups, the lowest representation of gender diversity of any team in the study. However, engineers were on average awarded more than double the equity of any other department, when comparing junior and mid-level employees.

"Women aren't in the right roles at the right time in a company's lifecycle," said Emily Kramer, vice president of marketing at Carta, explaining that women aren't in these positions that get "outsized equity" like founders, investors and early engineers.

Kramer added: "We need to take a hard look at how the startup and VC (venture capital) ecosystem values the work and talents of women. We can do better."

Founder equity

Focusing on founders of start-ups, the study showed that they held more than twice the equity of all employees combined. However, women founders with a stake in a company represented less than 1% of participants and held a mere 5% of equity value.

Male founders, on the other hand, accounted for 7% of equity holders and owned 64% of a company's investable assets.

Breaking this down into founder equity alone, Carta worked out women founders in Silicon Valley owned just 48 cents to every dollar held by their male counterpart.