Aalto University, Finland

Harvesting or Nurturing? Corporate Venture Capital and Startup Green Innovation

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ABSTRACT

Corporations are increasingly investing in startups focused on green innovation. However, what are their reasons for doing so, and how do corporate venture capital (CVC) investments affect startups’ green innovations? Utilizing unique data on European ventures that received VC funding from 2004 to 2019, we find that CVC investors select greener ventures. We also find that this is driven by CVC investors with parent corporations active in green innovation, suggesting that substantive motives rather than greenwashing are a major driver of green CVC investments. For green startups, while funding can also be obtained from nongreen CVCs, it is important to recognize CVC heterogeneity and the role of complementary green resources: only green CVCs nurture green innovation beyond selection effects. Our findings contribute to the literature on the effects of CVC, sustainable VC, and sustainable entrepreneurship

BIOGRAPHY

David Wunder is a fourth-year Doctoral Researcher at the Department of Industrial Engineering and Management at Aalto University, Finland, and is currently a Visiting Scholar Researcher at Stanford University for the fall term of 2024. His research lies at the intersection of sustainability, innovation, and entrepreneurship, with a particular emphasis on sustainable entrepreneurship and sustainable investing. David investigates how various types of venture capital investors, including corporate venture capital and cross-border venture capital, influence the growth and development of innovative, early-stage ventures, especially those focused on sustainable practices and technologies. His work explores how these investors' unique resources and sustainable orientations impact investment relationships and shape the sustainability outcomes of young ventures. David employs a mix of quantitative methods, including quasiexperimental approaches like differences-in-differences and instrumental variable estimation, alongside qualitative interviews.