Capital leaving no one behind? An empirical study of impact venture capital investments into the sustainable development goals

Abstract

Purpose: Achieving the Sustainable Development Goals (SDGs) requires substantial resource mobilization from the private sector to bridge the estimated annual funding gap of $2.5 trillion. Scholars recognize impact investing as part of that solution, but empirical studies in the nascent field are scarce. This study analyses funding patterns of impact venture capital towards the SDGs addressed by social ventures and contextualizes them geographically. Design/methodology/approach: To understand which of the SDGs receive the highest/lowest funding amounts from investors, a sample of 695 impact investment deals between 2017-2021 is collected from a leading financial database. Subsequently, the ventures are manually matched with their corresponding SDGs, and multiple regression models analyse the effect of those SDGs on the deal size while controlling for external factors. Findings: It becomes evident that neither the hypothesized SDGs nor their overarching pillars (planet, people, prosperity, and partnerships) positively influence the funding amount on a global scale. Nevertheless, some of the goals do receive significantly more/less financial attention from impact investors in particular geographies. Implications: On the one hand, the results outline opportunities for impact investors to tackleunderfunded SDG segments across several geographies and understand how past capital was allocated to shape future decision-making. On the other hand, policymakers can utilize the insights to identify which goals receive lower funding and supplement the lack of private capital through blended finance initiatives. This dissertation calls for further empirical research in the integrated field of impact investing and the SDGs.

Date of Award	27 Jun 2022
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Lars Norden (Supervisor)