By Gerald Arends and Sophia Golemi
Where funds are raised from the general public through seed and crowd-equity (CSF) investment rounds, gender differences become obvious. We were able to review some common assumptions about gender differences in investment and did not find all of them confirmed. Recent experience identified some challenges and provides a silver lining!
The background
The authors work with Komo Energy in delivering community-scale solar farms and are passionate about opening up investment into the energy transition to everyone. Many of these solar farms seek funding from the community, sometimes in the local/regional community and sometimes in a ‘community of purpose’.
Data from a total of 8 raises for Komo Energy, Grong Grong Solar Farm and Manilla Solar spanning the period from November 2020 to December 2023 shed light on gender differences in investment and suggest opportunities to overcome those differences.
Assumptions
For the purpose of data analysis, we have divided shareholders into male and female by assessing names1. We acknowledge that we have not contemplated other gender identifications. We also had to allocate joint investments2, companies and trusts3 to either male or female. We expect that any inaccuracy will not fundamentally change the outcome of our analysis.
Three Findings
We set out below an overview of the raises undertaken:
What we found is as follows:
First, female investors are significantly less likely to invest in a seed raise than in a crowd equity raise. Seed raises typically require a larger investment volume (e.g. greater than $10k or higher hurdles) and also typically take place at an early stage when risks are higher. Crowd equity has the ability to spread investment risk across a larger investor pool and can tolerate significantly smaller investments.
We suspect that many female investors do not commandeer the disposable funds required for the larger seed investments and may also not be interested in making a larger investment at a higher risk.
We found that in the crowd equity raises for Komo Energy and Grong Grong Solar Farm, female investors made up between 20 to 25% of the investor pool, whereas they accounted for 6% or less of the investors in the seed raises preceding those crowd equity raises (an exception was a seed raise between the two crowd equity raises for Grong Grong Solar Farm.
Secondly, when women invest, their proportion of the total investment pool broadly matched their proportion of the investor pool. While there were less female investors, on average they invested the same amount as their male counterparts.
This finding surprised us as we assumed that there are not only less female investors, but that each of them would also invest a smaller amount than male investors. We acknowledge that the investments investigated here have an industry bias and we wonder whether there would be a different outcome for other industries. We also note that the typical investment size was shy of $2,000 and these smaller investments may show a lesser gender difference in investment size.
Thirdly, the figure head matters. He or she builds trust and networks. One of the authors (Gerald) is painfully aware that the Komo Energy and Grong Grong raises were led by two white, male, middle-aged men (one Anglo-Saxon, one Germanic for some diversity!). During these raises, we made the assumption that there is a significant gender imbalance in investment and that these would be hard to overcome. But are they?
Two raises for Manilla Solar in late 2023 showed a significantly different picture. While they were technically led by the same mono-genderous (if there is such a word?!) team of Gerald Arends and Jonathan Prendergast, the project had been conceptualised and promoted in the community by the fabulous Emma Stilts and the committee of Manilla Community Renewable Energy Inc. which has strong female support, including through the Country Women’s Association of NSW. The community of supporters for the project was predominantly female and the channels for promoting the raises were purposefully built on those networks, predominantly amongst women.
The outcome for Manilla Solar? Investor numbers were 59% female during the seed raise and 66% during the crowd equity raise. Even more impressive is the actual investment: 63% female investment during the seed raise and 78% during the crowd equity raise.
Conclusions
As Manilla Solar prepares for another round of fund-raises, we have a unique opportunity to explore further the benefits of female leadership, target investment size and novel channels for promoting an investment. This project provides a welcome silver-lining suggesting that the perceived differences in investment behaviour can be overcome.
Notes
1 In dividing shareholders into male and female, we have assessed names both manually and – because we are nerds – with the help of ChatGPT (the latter was faster).
2 We allocated joint investments to the gender of the first-named investor as the first-named investor typically has a privileged position in the company constitution. We assume that the naming sequence of joint investors may be indicative of the relative (financial) power of the joint investors. We appreciate that each joint investment may be different and do not intend any offence!
3 We allocated companies and trusts to either male or female in accordance with the gender of the first or main contact stipulated for each company or trust.
About us
Gerald Arends is a founder and Head of International Project Development of Komo Energy and a director of Grong Grong Solar Farm and Manilla Solar. Sophia Golemi has worked on the fund-raises for the Grong Grong Solar Farm and Manilla Solar.
Pegasus Legal is a boutique law firm with an exceptional level of expertise in the renewable energy sector. Our lawyers have worked on a large number of solar, battery, biomass and wind projects in a wide range of countries. For further information please contact director Gerald Arends.
Pegasus Legal has worked extensively alongside several community renewable energy groups and Komo Energy on community renewable energy projects. In this context, Pegasus Legal has built substantial expertise in crowd equity (crowd-sourced finance, CSF) investment, having worked on offer documents and corporate support on multiple raises across several crowd equity intermediary platforms.
