Impact of climate and economic policy uncertainty, renewable energy consumption, oil price and CVC on VC cleantech funding amounts

Abstract

This paper examines the impact of climate policy uncertainty (CPU), economic policy uncertainty (EPU), brent crude oil spot prices, renewable energy consumption, and corporate venture capital (CVC) on venture capital funding in the cleantech sector, focusing on United States based startups and investors between 2000 and 2024. Our results demonstrate that EPU consistently boosts cleantech VC funding, particularly when lagged, indicating investors view the sector as a hedge against broader economic uncertainty. In contrast, CPU has a more variable subsector-specific effect, with limited broad sector influence. CVC investments, on the other hand, enhance funding, supported by a Resource-based view of a CVC offering value-adds to the young cleantech venture. An inverted U-shaped relationship between renewable energy consumption and VC funding is also identified, where initial demand increases investment but then diminishes and seems to reverse over time. Oil prices have a negative impact on VC cleantech deal funding, suggesting a complex relationship between fossil fuel markets and cleantech investment. This research contributes to the existing literature by introducing novel factors affecting cleantech VC funding and recommends future studies to explore the dynamic (non)-linear interactions between these variables and their macroeconomic implications.

Date of Award	15 Oct 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Fátima Shuwaikh (Supervisor)