IS IT EASY BEING GREEN? The Role of Venture Capital Investors in Green Venture Financing

Abstract

This dissertation examines and explains the role of venture capital investors when financing green ventures. Venture capital, early equity invested in high-growth ventures, has proven to be a valuable tool that stimulates the emergence and development of new ventures. The attributes of green ventures are believed to make them unattractive to venture capital investors. Whilst the need for new green technologies to help reduce environmental degradation is clear, we know little about who actually invest in the new ventures commercializing these technologies and how this financing can be explained. This dissertation focuses on two of the main providers of venture capital: independent venture capitalists and established corporates. The dissertation develops new knowledge as to the position and the role of these investor types. From a theoretical perspective, it develops a conceptual understanding as to how finance theory needs to be adapted to explain for venture capital investing in green ventures. From a practical perspective, it explains how to enhance the role of venture capital investors in the development of green ventures.

The dissertation comprises of four empirical papers and uses a mixed-methods approach to investigate different types of venture capital investors in relation to green venture investing. The first research paper focuses on how independent venture capitalists are innovating to invest in circular economy ventures. It finds that the fund model can be adapted to remain relevant in a green context and that independent venture capital can stimulate the building of a market for green ventures. The second research paper focuses on established corporates investing in green ventures. It finds that the type of corporates investing are diverse, and that different types of firms have distinct antecedents to invest in green ventures. Research paper three and research paper four both examine investments by corporate angels. Paper 3 introduces corporate angels as an investor type, being the first to describe SMEs investing venture capital. Paper 4 studies corporate angel investments in green ventures from a demand side perspective and finds that whilst corporate angels are assisting the development in the earliest stages, they are unable to do so in later stages.