The impact of the EU green deal on venture capital investment behavior in climate tech

: a shift towards sustainable investments?

Abstract

Climate change is one of the most urgent global challenges, requiring immediate action and innovative solutions. This thesis examines the influence of the EU Green Deal on Venture Capital investment strategies, focusing on sustainable startups in the climate tech sector. Using Mayring's qualitative content analysis, it combines insights from expert interviews with VCs, climate tech startups, and industry experts, alongside secondary data, to analyze how regulatory frameworks and market dynamics shape investment behavior. Findings reveal that the Green Deal fosters sustainability-aligned investments through mechanisms like InvestEU and the European Investment Fund, which de-risk capital- intensive climate tech projects and mobilize private capital. Regulatory and normative pressures, such as societal expectations and reputational incentives, further encourage VCs to integrate sustainability into their strategies. However, potential financial returns remain the primary motivator for investments. Key challenges include an equity gap in the European VC market and bureaucratic inefficiencies that hinder private sector scalability. Despite these barriers, the Green Deal has contributed to building a structured environment that promotes sustainable innovation. This thesis adds to institutional theory by highlighting how regulatory and normative frameworks influence VC behavior. It provides actionable recommendations for policymakers, VCs, and startups to address funding gaps, reduce inefficiencies, and strengthen Europe’s sustainable venture capital ecosystem.

Date of Award	3 Feb 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Nuno Moreira da Cruz (Supervisor)