A comparative analysis

: the differences in performance between venture capital strategies

Abstract

This thesis looks into the differences in financial performance of venture capital (VC) funds that use traditional, ESG, and impact-driven focused methods. After retrieveing fund data from Preqin database of 1903 funds, the funds are classified into one of the three assessed strategies: traditional approach, ESG investing, or impact investing. Through the analysis of our study we assesses fund performance using metrics such as Net Internal Rate of Return (Net IRR) and Multiple on Invested Capital (MOIC). Our empirical investigations challenge the status quo by indicating that impact-driven funds outperform their ESG counterparts in terms of financial performance and refute the presumption that obtaining competitive financial returns must be sacrificed in favour of creating social and environmental consequences. In addition, the need of accounting for vintage year impacts becomes apparent, emphasising the impact of industry and macroeconomic shifts on fund performance. By providing information on the financial viability of impact and ESG investing in the venture capital industry, this study adds to the body of knowledge on VC investment methods and performance. It contributes factual support to the discussion of socially conscious investing techniques and has important ramifications for investors and fund managers who aim to strike a balance between monetary gains and environmental and social aims.

Date of Award	10 May 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Fátima Shuwaikh (Supervisor)