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Clean Energy Innovation and the Influence of Venture Capitalists' Social Capital

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  • Till Fust

Abstract

This study contributes to the understanding of the enabling role that venture capitalists can play in bringing new innovative technologies to market, with a focus on clean energy technologies. Applying the structural model introduced by Sorensen (2007) that allows to control for a potential sorting bias, I estimate the influence of venture capital investor's social capital on startups' funding and exit performance, with social capital de ned as the investors' eigencentrality and constraint within the network of investors. Looking at startups' first venture capital funding rounds in California between 2001 and 2019, this study finds a positive and significant influence of the lead investor's eigencentrality on the funding amount raised and the exit probability of the firm. Furthermore, a less constrained lead investor also increases the chance of the startup's eventual exit. But no differentiated effect for cleantech startups compared to other industries is found.

Suggested Citation

  • Till Fust, 2020. "Clean Energy Innovation and the Influence of Venture Capitalists' Social Capital," CIES Research Paper series 60-2020, Centre for International Environmental Studies, The Graduate Institute.
    • Handle: RePEc:gii:ciesrp:cies_rp_06
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    References listed on IDEAS

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    1. Paglia, John K. & Harjoto, Maretno A., 2014. "The effects of private equity and venture capital on sales and employment growth in small and medium-sized businesses," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 177-197.
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    4. David Popp & Jacquelyn Pless & Ivan Haščič & Nick Johnstone, 2020. "Innovation and Entrepreneurship in the Energy Sector," NBER Chapters, in: The Role of Innovation and Entrepreneurship in Economic Growth, pages 175-248, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Venture Capitalists; CleanEnergy; Clean Technologies; Startups; Capital Funding; Cleantech startup;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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