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The Role of Environmental Policies in Promoting Venture Capital Investments in Cleantech Companies

Author

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  • R. Bianchini
  • A. Croce

Abstract

This paper provides insights on the role of environmental policies in promoting venture capital investments in companies involved in the development of clean technologies. Based on a supervised machine learning algorithm, we develop a fully replicable methodology to identify cleantech firms among a comprehensive database of invested companies by venture capital funds. We then analyse the relationship between the stringency level of environmental policies and venture capital investments in cleantech companies operating in 21 OECD countries. We explore whether policies have a differential effect in fostering institutional venture capital (IVC) and governmental venture capital (GVC) investments. Our findings indicate that IVC investments in cleantech are mainly driven by the level of environmental taxes and market pull mechanisms as feed-in tariffs and R&D subsidies, whereas GVC investment decisions are driven by a country's commitment to reach environmental targets. Moreover, our results suggest that GVC funds are developed as an alternative incentive mechanism: when direct incentives applied by governments are less developed, the relevance of GVC investments increases, which suggests a substitution effect between the two forms of intervention.

Suggested Citation

  • R. Bianchini & A. Croce, 2022. "The Role of Environmental Policies in Promoting Venture Capital Investments in Cleantech Companies," Review of Corporate Finance, now publishers, vol. 2(3), pages 587-616, December.
    • Handle: RePEc:now:jnlrcf:114.00000024
    DOI: 10.1561/114.00000024
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    Citations

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    Cited by:

    1. Köppl-Turyna, Monika & Köppl, Stefan & Christopulos, Dimitris, 2023. "How to support cleantech start-ups? Lessons from European venture-capital deals," Research Papers 25, EcoAustria – Institute for Economic Research.
    2. Mei Feng & Chu Chen & Jia Liu & Wei Jia, 2022. "Does Central Environmental Protection Inspector Improve Corporate Social Responsibility? Evidence from Chinese Listed Companies," Sustainability, MDPI, vol. 14(22), pages 1-22, November.
    3. Douglas Cumming & Satish Kumar & Weng Marc Lim & Nitesh Pandey, 2023. "Mapping the venture capital and private equity research: a bibliometric review and future research agenda," Small Business Economics, Springer, vol. 61(1), pages 173-221, June.
    4. Liu, Huan & Hou, Canran, 2023. "The impact of institutional investors' corporate site visits on corporate social responsibility," Emerging Markets Review, Elsevier, vol. 55(C).
    5. Guillochon, Justine, 2022. "The role of media, policy and regional heterogeneity in renewable energy project crowdfunding," Energy Economics, Elsevier, vol. 115(C).
    6. Lei Wang & Weijia You & Yingying Zhou & Fei Meng, 2022. "How Does Green Supply Chain Management Promote the Success of Crowdfunding Projects? Empirical Research Based on the QCA Method," Sustainability, MDPI, vol. 14(19), pages 1-21, September.
    7. Manru Peng & Chendie Wei & Youliang Jin & Hangxin Ran, 2023. "Does the Environmental Tax Reform Positively Impact Corporate Environmental Performance?," Sustainability, MDPI, vol. 15(10), pages 1-19, May.
    8. Tifang Ye & Xiuli Xiang & Xiangyu Ge & Keling Yang, 2022. "Research on Green Finance and Green Development Based Eco-Efficiency and Spatial Econometric Analysis," Sustainability, MDPI, vol. 14(5), pages 1-29, February.

    More about this item

    Keywords

    Cleantech; environmental policies; venture capital; machine learning; environmental finance;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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