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Developmental venture capital: conceptualizing the field

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  • Julia Sass Rubin

Abstract

Developmental venture capital is the financing of businesses with equity and near-equity in order to achieve both social and financial objectives. The social returns include economic development of distressed urban and rural geographies; creation of high-quality jobs for low-income populations; building wealth for women and people of color; and creation of products that benefit society, such as those that lower poverty or contribute to a cleaner environment. This article introduces a conceptual framework for the developmental venture capital industry based on the social objectives of individual funds. The framework distinguishes between funds that have corrective versus additive objectives. Funds with corrective objectives are designed to address inadequate access to traditional venture capital by specific geographies and populations. Funds with additive objectives are meant to further specific social goals, such as fighting poverty or environmental degradation. This framework further differentiates between two forms of corrective venture capital, based on the capital access obstacles that each is trying to address and whether the resulting economic models require subsidy.

Suggested Citation

  • Julia Sass Rubin, 2009. "Developmental venture capital: conceptualizing the field," Venture Capital, Taylor & Francis Journals, vol. 11(4), pages 335-360, July.
  • Handle: RePEc:taf:veecee:v:11:y:2009:i:4:p:335-360
    DOI: 10.1080/13691060903184829
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    Cited by:

    1. Anna Kovner & Josh Lerner, 2015. "Doing Well by Doing Good? Community Development Venture Capital," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(3), pages 643-663, September.
    2. Anna Höchstädter & Barbara Scheck, 2015. "What’s in a Name: An Analysis of Impact Investing Understandings by Academics and Practitioners," Journal of Business Ethics, Springer, vol. 132(2), pages 449-475, December.
    3. Syrus M. Islam, 2022. "Impact investing in social sector organisations: a systematic review and research agenda," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 709-737, March.
    4. Julia Sass Rubin, 2011. "Countering the Rhetoric of Emerging Domestic Markets: Why More Information Alone Will Not Address the Capital Needs of Underserved Communities," Economic Development Quarterly, , vol. 25(2), pages 182-192, May.
    5. Eline L. Ingstad & Mirjam Knockaert & Yves Fassin, 2014. "Smart money for social ventures: an analysis of the value-adding activities of philanthropic venture capitalists," Venture Capital, Taylor & Francis Journals, vol. 16(4), pages 349-378, October.

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