Venture capital’s role in creating a more sustainable society: The role of exits in clean energy’s investment growth

Ari Ginsberg, Alfred Marcus

Research output: Chapter in Book/Report/Conference proceedingChapter

2 Scopus citations

Abstract

Venture capital’s role in clean energy (CE) technologies can be transformative in creating a sustainable society. Yet there are limitations on how far venture capitalists (VCs) can go in supporting these technologies. These limits exist because of the performance expectations of the main stakeholder group who hold VCs accountable. The financial backers of VCs expect an exceptional return on their investment, given the high level of risk they take on when they invest in unproven startups. This chapter explores the constraints that the financial obligations VCs have to their main backers put on their role in bringing about a more sustainable global society. It investigates VC firms’ responses to CE exits (initial public offerings (IPOs) and acquisitions) and shows how prior CE exits affect CE investment growth when we compare VCs exit records to that of their peers. This chapter demonstrates that VCs only increase CE investments when the cumulative number of exits substantially exceed that of their peers, while they decrease these investments when the cumulative number of their exits only moderately outpace that of their peers. The chapter suggests that the reason VCs respond in this way is the financial pressure VCs experience because of their dependence on their financial backers.

Original languageEnglish (US)
Title of host publicationAdvances in Strategic Management
PublisherEmerald Group Publishing Ltd.
Pages145-168
Number of pages24
DOIs
StatePublished - Jan 1 2018

Publication series

NameAdvances in Strategic Management
Volume38
ISSN (Print)0742-3322

Keywords

  • Clean energy
  • Performance expectations
  • Return
  • Risk
  • Sustainability
  • Venture capital

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