Going green
: the effect of sustainable investments on venture capital fund performance

  • Philip Scherbaum (Student)

Student thesis: Master's Thesis


Through its innovative power, venture capital can become a cornerstone in the battle againstclimate change if sustainable investments allow venture capital funds to fulfill their fiduciaryduty. Prior research has shown that purely sustainability-oriented funds sacrifice financial forsocial returns and that sustainable companies usually do not fit the requirements of venturecapitalists. However, little attention has been given to the impact of sustainable investment onmainstream venture capital performance. To fill this gap, this study aims at measuring andexplaining the effect of sustainable investments on mainstream venture capital funds.Therefore, venture capital fund performance, measured as exit percentages, was regressed onsustainable investments, measured through clean technology investments. Thisrelationship wasalso tested for mediation. Furthermore, a set of probit regressions measured the impact ofsustainability on company survival to another funding round. Analyses of these relationshipsdemonstrated that sustainable investments negatively impact fund performance and thatinvestment opportunities mediate this effect. Additionally, the analyses demonstrate thatsustainable companies are more likely to receive follow-up funding than non-sustainablecompanies. These results indicate a negative impact of sustainable investments on mainstream venture capital performance and that this effect is not caused by adverse company characteristics but by a higher valuation paid for attractive, sustainable companies. Hence, it isrecommended that mainstream venture capitalists invest in suitable sustainable companies but only if valuations are favorable. Further research still needs to analyze the effect of a recent sustainability investment wave on venture capital performance.
Date of Award6 Jul 2022
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorFátima Shuwaikh (Supervisor)


  • Mestrado em Finanças

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