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Is green the new gold? Venture capital and green entrepreneurship

Author

Listed:
  • Boris Mrkajic

    (Politecnico di Milano School of Management)

  • Samuele Murtinu

    (University of Groningen)

  • Vittoria G. Scalera

    (University of Amsterdam Business School)

Abstract

We test whether born-to-be-green represents a signal toward potential venture capital (VC) investors on a sample of Italian, independent, unlisted, high-tech entrepreneurial firms. We employ several identification strategies by controlling for the major potential signals and the alleged selection bias between green and non-green entrepreneurs. We exploit firm-level information about the “active search for VC financing.” Alternatively, we exploit the cross-local community variation in the awareness about environmental issues in an instrumental variable setting. Our results show that neither running a business based on green technologies nor positioning a business in a green sector per se are strongly correlated with the likelihood to get VC. Instead, we find that born-to-be-green can be a reliable signal for investors only when entrepreneurs perform activities based on green technologies/products and position their business in a green sector, at the same time. Further, we present three contingencies that moderate the association between green business propositions and the likelihood to get VC, namely the technical/scientific education of the founder(s), the origin of the firm as academic spin-out, and the presence of corporate shareholders into the venture’s equity. The paper offers relevant managerial implications.

Suggested Citation

  • Boris Mrkajic & Samuele Murtinu & Vittoria G. Scalera, 2019. "Is green the new gold? Venture capital and green entrepreneurship," Small Business Economics, Springer, vol. 52(4), pages 929-950, April.
    • Handle: RePEc:kap:sbusec:v:52:y:2019:i:4:d:10.1007_s11187-017-9943-x
    DOI: 10.1007/s11187-017-9943-x
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