Influence of Investor-Venture Interactions on Sustainability Impact An explorative study of investor-venture interaction’s influence on sustainability Impact of early-stage ventures and their investors

Abstract

Entrepreneurial ventures play a crucial role in providing markets with new sustainability offerings that are inevitably essential in the transition to a more sustainable society in the decades to come. Entrepreneurial ventures are, however, often dependent on external capital from the private equity market for testing, developing and scaling its product offerings in the market. This thesis therefore investigates the dynamics in the interaction between entrepreneurial ventures and their investors in relation to the sustainability impact of the ventures and in what way the venture-investor interaction tends to influence such undertakings in the venture. In doing so, this study collects data from semi-structured interviews, using data from three pairs of investors and technology based entrepreneurial ventures, with a sustainability profile. That is, each pair includes an investor from a venture capital firm that has invested in an entrepreneurial venture. The ventures can be described as in the early stages, in the sense that they are either testing their product or having limited commercial sales. The data is analyzed using qualitative methods of separating the data in first-order descriptive codes from the interviews and second-order analytical codes of patterns of venture-investor interaction dynamics related to sustainability impact of the ventures. At a descriptive level all three ventures in the study are purpose-driven and aim to generate an impact related to sustainability in its respective industries and thereby show clear intentions to generate value to society overall. All three investors acknowledge the importance of addressing issues related to sustainability but differ in their intentions. Their aim in the interaction can either be described as sustainability performance intentions or financial performance intentions. The findings in this study indicate that investors with financial performance intentions prefer that entrepreneurial ventures focus on sustainability when the business case and profitability exist already, that is often as the venture matures. Investors with sustainability performance intentions are on the other hand more strategic in their undertakings from the beginning and only invest in ventures that have sustainability on their agenda as well as strategically support those ventures, the study indicates. In that sense, a key takeaway for entrepreneurial ventures that aim to generate sustainability impact is that they need to be careful when selecting investors to collaborate with in terms of the dynamics related to sustainability. Future research could aim to further validate these findings by expanding its cultural, economic and geographic scope and through complementary field research to investigate the dynamics of investor-venture interaction regarding sustainability impact of entrepreneurial ventures.