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HomePaperStartups’ Strategies for Green Funding Adoption

Startups’ Strategies for Green Funding Adoption

1 January 2024
Authors: Ye Zhang (Stockholm School of Economics)
Presenter: Ye Zhang (Stockholm School of Economics)
Abstract:

This paper examines how firms choose between ESG and profit-driven investors during the fundraising process within the startup-venture capital (VC) context. It employs complementary real-stakes placement experiments with US startup founders, linking founders’ experimental behaviors with their real-world fundraising activities. While founders derive positive non-pecuniary utility from partnering with ESG VCs, VCs targeting environmental impact still struggle to attract startups due to financial reasons, with lower-quality VCs more affected. Founders believe such collaborations could hinder profitability and the likelihood of raising funding. Particularly, profit-driven startups, smaller startups, Republican founders, and startups in heavy industries demonstrate less interest in adopting green funding.

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