Have you seen the latest “women are getting hosed” data from Carta this week? If you are a female founder, you better sit down. It turns out women get dramatically less equity in startups. 

Here are the facts, per the study: 

  • Women make up 35% of equity-holding employees, but hold only 20% of employee equity.
  • Female equity-holding employees own just 47 cents for every dollar male employees own.
  • Women represent 29% of employees at companies with up to 10 employees. Female representation doesn’t exceed 40% until companies approach 400 employees.
  • Women make up 13% of founders, but hold 6% of founder equity.
  • Female founders own just 39 cents for every dollar of equity male founders own

I’m always grateful for more data, but this shouldn’t come as a shock to any women who work at startups. But, as someone in the trenches, the explanations why are more complex than most of the thought pieces I’ve read on the study this week. 

Yes, as most people know, founders don’t get equal equity. The role you have at the company matters, which is why I have long argued that focusing on comparatively “feel good” numbers about how much money goes to female founders versus how much money goes to female CEOs clouds how well women are actually doing in tech. 

“Founder” is a frustratingly amorphous term. Sean Parker, for instance, is called a “founder” of Facebook, although he discovered the company years after its incarnation. Countless lawsuits have been waged over who gets to call themselves a founder. Lawsuits aren’t waged over whether or not someone was a company’s CEO. 

But this is way more complex than title. Founders frequently split equity based on what they bring to the table. Because of the nature of Silicon Valley, male founders probably have made more money in previous ventures, and hence have the luxury of, say, not working for a salary. Equity versus cash is a consideration in every startup hiring agreement. If female employees or founders require or want a higher salary—name the reason: they’re more risk averse, they’ve got kids, they haven’t made the same money earlier in their career thanks to bias—they will get less equity. 

Male founders are also more likely to bring the kind of industry connections, fundraising track record, brand, media profile that would warrant more equity, because of entrenched bias in tech, venture capital, business generally and the press. Bias begets more bias.

What continues to jump out at me as I try to build a company as a woman, and go to both male and female founders for advice and commiseration, is how much the taxes of pre-startup gender baggage exacerbate the challenges of being a female founder, bad as they are. 

Let me give you an example: Let’s say I am building a company in a tough new and unproven category that VCs aren’t quite sure about. It’s likely that a female founder will have a hard time raising money—as we always do. It is also likely that a male founder in a market like this will struggle. Pandora was turned down by something like 80 investors, and went for years without paying staffers. There are tons of stories like these in the Valley of a time “VCs just didn’t get it.” Seemingly, those stories are gender blind. After all, both genders were locked out of VCs’ pattern recognition of what a “winner” looked like, right? 

But here’s the difference: Your prototypical young Ivy League dropout from a wealthy family can bootstrap a lot longer living in a flop house and eating Ramen than a mother of three kids in San Francisco can. Advantage goes to the young male founder from an affluent family. 

Likewise, a journeyman Silicon Valley executive who has been early in a handful of startups already, angel invested or advised a few thanks to his network, can also likely weather that more than a woman who has been fighting to make an equal salary to her male counterparts, and has been denied promotion thanks to unconscious bias at work. 

And that’s before we consider the serial founder who has made enough wealth that he can back his venture on his own. 

These are—admittedly—generalizations and highly specific stereotypes and examples. But that’s precisely the issue when we’re grappling with the thorny question of why female founders find themselves so starved for resources. Entrepreneurship is an individual game, and your success as an individual before you enter it—including your past earnings, connections, brand, and industry profile—are what give you leverage with negotiating equity. 

Yes, startups are operating in an insanely biased market where female CEOs get less than 3% of the capital. But it’s also all the bias leading up to that moment you vie for that 3% that hurts our ability to go long, to play for higher chunks of equity, and to ultimately survive the inevitable nuclear winter that all startups go through. That’s the part of the story most folks don’t realize until you are in it. 

And when we don’t survive or don’t get the biggest windfall should our company win, there’s also a follow on effect. Female founders who don’t make it due to lack of resources confirm to VCs they were right not to back them, and those who do win don’t win as big, giving them less money to invest in future generations who look like them. 

It’s similar to what we see with women’s issues politically: Women give about 5% to candidates, and so our issues aren’t front-and-center. How do you change that, though, when policies are never advanced that help champion gender equality?

I reported on studies like these for decades as a journalist, but it was only in becoming a founder that I realized that this is a much deeper, more systemic problem than simply putting more women in partner roles throughout the biggest venture firms. And that’s just considering the plight of white women in this ecosystem. For women of color there is unquestionably even more pre-existing bias weighing on their chances. 
I know not all of the Chairman Mom audience is in tech, but if you want to go deeper on any of this we’ve got an entire “Startup” tab with close to 100 threads dedicated to venting, problem solving, and advice.

Check out of a few of our favorite threads about startups and add your insights:

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