This Women’s History Month, the Financial Technology Association is profiling powerful women leaders in fintech and spotlighting ways that their expertise and leadership help expand access to financial services for women.
We sat down with Holli Heiles Pandol, Policy Counsel at Carta, for a Fintech Explained conversation about equity, investing 101, and the steps Washington can take to support wealth-building opportunities for women, including expanding the definition of an accredited investor. Check out our full Q&A below.
Q: Tell us about Carta’s mission to create more owners and expand access to investment opportunities.
Carta is on a mission to create more equity owners. Ownership benefits employees, investors, businesses, and our communities. We believe shifting to an ownership economy will help fight income inequality.
Carta is hard at work building infrastructure for the innovators who push our economy forward—products to help people manage their equity and create more owners. And we’re committed to educating people about equity through content series like Equity 101, consistently evaluating the equity gap through our annual Carta Equity Report, and convening leaders to address the gap at our annual Equity Summit.
Q: Owning equity in a company can seem complicated, but Carta makes it simple. Can you tell us about your Equity 101 effort and how you make equity easy for companies and employees?
Equity ownership is one of the most powerful tools for wealth creation. But unfortunately, today, more than half of vested options go unexercised—meaning employees are leaving money – and opportunity – on the table.
One of the ways to solve this is access to free, easy-to-understand financial education so people can learn about their equity and other financial investment tools.
So last year, Carta released Equity 101—10 free interactive lessons that break down concepts so people can understand the value of equity and become more confident managing it, from offer to grant to exercising options and beyond. The Equity 101 campaign is part of an ongoing effort by Carta to create more owners.
But in addition to creating more equity owners, we need to make that ownership meaningful. That requires us to empower people to understand and act to maximize its value.
Q: Having equity, or an ownership stake in a company, is a significant way to build wealth, but women own just over 22 percent of US companies. How is Carta leading the way in expanding investing on-ramps for women?
Carta is expanding investing on-ramps for women in two key ways. First, we report every year on the equity gap through our Carta Equity Report. You can’t change what you don’t measure. Second, we are highlighting female leaders in this space through our Carta Equity Summit and our Innovator profiles. You can’t be what you can’t see.
Venture is an industry defined by long-term potential and long-term impact. Today equity ownership is unevenly distributed. We will not close the equity gap overnight. We can, however, measure progress and inspire one another to pursue a better future.
Q: Many systemic barriers prevent women and entrepreneurs of color from raising money from their networks to fund their business ideas. What can Washington do to dismantle these barriers?
Research has shown that women-owned companies perform better yet have a harder time attracting investment capital. Just as there is a pay gap, there is also an investment gap.
One way to increase funding to diverse founders is to increase diversity among capital allocators, and policymakers should consider ways to make it easier for emerging managers to raise capital. Policy changes that would make it easier for more established funds to invest in emerging funds—including women- and minority-led funds—can lead to more capital being directed to women and minority founders. And VC and institutional LPs should be intentional in closing the investment gap.
Policymakers should also consider ways to expand the accredited investor definition to reflect financial sophistication instead of financial means. Policymakers should be thoughtful when considering changes to the accredited investor financial thresholds, as efforts that would increase these thresholds will reduce capital available to entrepreneurs, particularly in traditionally underserved regions and populations with lower costs of living.
Q: This Women’s History Month, what is your advice to women when it comes to accessing opportunities and building wealth?
One of the biggest barriers women face in the innovation ecosystem is around access—access to networks, opportunity, and support. One way to reduce these barriers is building out more resources and communities to support women entrepreneurs and investors. Take advantage of every opportunity to build your network, and don’t be shy in seeking out those opportunities. And when you are able to pay it forward, be a mentor and offer those opportunities to other women.
Want to learn how fintech expands investment access and opportunity? Read the Financial Technology Association’s Just the Facts on Capital Markets.