Women founders have a huge problem: Too little equity

Wondering why there's no woman in the top 10 on Forbes' list of billionaires? One reason might be the small amount of equity held by female founders of companies. 

The tech industry has come under fire for not hiring and paying women equally with men, but the gap is much worse when it comes to company ownership. Women own just 6 percent of founder equity, despite making up 13 percent of startup founders, analysis from Carta, a startup-valuation company, found.

Equity, or ownership, in a startup is the jackpot if the business succeeds. The first handful of workers at a startup often forgo large salaries in exchange for a stake in the company. If the startup does well and eventually is acquired by a larger company, or goes public, those stockholders can cash in massively. It's also seen as an incentive: If you put in the work, you'll reap the reward. 

Take Jeff Bezos, the richest man alive and founder of e-commerce giant Amazon. His personal wealth is mostly composed of how much of Amazon he owns -- about 16 percent of the company, or 80.4 million shares. At Thursday's stock price of around $1,944 a share, that makes his Amazon stake worth $156 billion.

Carta examined some 6,000 startups in its database covering 180,000 employees. The result? Just 9 percent of all startup equity, accounting for value, is owned by women. When it comes to employees who receive equity (like a senior VP who gets stock options as part of her pay package), it's not much better: Women hold just 20 percent -- even though they make up 35 percent of all equity-holding employees.

"I think we all knew it was bad … I don't think any of us quite expected it to be as bad as it is," said Henry Ward, Carta's CEO. Ward was inspired to do the research by a blog post earlier this year from a female-focused investment collective called Angels.

A few possible reasons might account for that, Ward theorized. Female founders have a notoriously difficult time raising capital, so they could accept more onerous terms from funders that dilute their own stake of the company. And the early-employee roles that tend to come with large equity packages, like executives and engineers, tend to be fields dominated by men.

Still, Carta's data show that women's lack of presence in the realm of equity is even more stark than their underrepresentation among startup employees. That's an imbalance that needs to be addressed to avoid a self-perpetuating cycle, Ward said.

"It's not something that naturally gets better over time," he explained. "If you imagine that the next generation of investors comes out of today's successful founders, and it's overweighted male, then those investors will be overweighted male. And we know from the data that they tend to invest more in male environments."