The 2020 Table Stakes Report is an initiative by Carta to analyze equity distribution by gender, race & ethnicity, and geography.
The study explores how, and if, equity ownership has made any progress diversifying beyond the historical concentration of a select few demographics. The report suggests that this concentration of equity ownership is a primary driving force for the wealth gap’s exponential growth.
The Carta study is unique in that it leverages a comprehensive data set of over one million equity owners and $1 trillion in equity value. Carta users can voluntarily and confidentially self-report demographic data such as gender, race & ethnicity, and parental status. Carta has partnered with #ANGELS since 2018 to measure equity ownership at scale through the Table Stakes report.
The report investigates the four categories of corporate stakeholders earning the largest proportion of equity: founders, senior executives, early employees, and technical employees.
Women and People of Color are underrepresented in each category. The report concludes that while there has been incremental growth in representation in 2018, it hasn’t been substantial enough to be meaningful.
Gender & Equity Distribution
There hasn’t been a substantial increase in overall representation in women’s ownership– for every dollar in equity that men collectively own, women own 47 cents.
Although the representation of women has increased since 2019, it has not since carried over to ownership. Women represent 35% of equity holders but only own 23% of the total equity. The Carta data suggests that women employees own less equity due to a lack of representation in positions with the highest equity ownership percentages, such as senior executives, early-stage employees, and engineering roles.
Founders: The percentage of women founders hasn’t surpassed 20% and has stayed the same since 2016. Specific sectors tend to attract women founders more than others, such as healthcare, eCommerce, food products, and a rapidly growing number of women in consumer electronics.
The high-valuation healthcare industry has a higher percentage of women founders than average. Still, there is a significant drop-off in the post-money valuation of the sectors in which women are founding companies. The data suggests the need is to fund more women founders, regardless of the industry.
Senior Executives: Women tend to be underrepresented in all roles above the Director level, severely limiting the opportunities to earn large equity grants.
Although women are currently underrepresented in these roles, companies are beginning to increase C-suite representation– with women making up nearly 40% of the C-suite in Series E companies.
Early Employees: The Carta data shows that women are hired consistently across all departments at the early employee level, with a notable exception of Engineering. Engineering and Operations had a higher proportion of women at Series E companies. The report posits that since women in the Engineering and Operations departments join in the later stages instead of earlier stages, they are limited in the disproportionate upside of early-stage employee equity grants.
Technical Roles: The Carta report finds that technical roles such as engineering usually earn the largest equity grants at every seniority level. The majority of women employees take roles in lower equity departments, such as Human Resources and Marketing.
People of Color & Equity Ownership
The Carta report notes that People of Color make up an incredibly small percentage of employee stakeholders in its dataset. This highlights the overall lack of racial diversity in the startup world– very few Black and Hispanic/Latinx employees hold a significant amount of equity wealth, a particularly stark contract considering their lack of representation in the employee-stakeholder ecosystem.
The bulk of Black employees are employed in non-technical roles such as customer success, sales, and operations. Comparatively, the majority of Asian and South Asian employees are employed in engineering or product roles.
This difference in department representation may contribute significantly to the difference in equity ownership by race and ethnicity, as technical roles such as engineering typically see the highest equity grants at every seniority level.
Equity grant size typically grows with seniority. According to our data,
More white and South Asian employees sit in VP or higher positions, roles that see growth in equity grant size, and Black and Hispanic/Latinx employees are underrepresented in these levels.
Black employees are more likely to join companies at later stages of growth, limiting early equity’s potential upside. For example, about 21% of Black employees joined a company at the Series A round versus 30% of South Asian employees.
The Carta report implores us to explore how we can promote the representation of women and People of Color at meaningful positions positioned for high-equity ownership. Carta has developed an equity education program aimed to provide training to over 100,000 employees.
At Kauffman Fellows, we are working on increasing the number of diverse venture capital partners who understand the nuances of different industries, products, cultures, and problems. People invest in others who are similar to themselves (the “selection bias problem”) – if certain demographics don’t have meaningful investment positions, it’s unlikely that entrepreneurs from those demographics will get the necessary capital to solve problems in their communities. We will continue to push for a more diverse industry through our two-year program and a global diverse network.