PhD Seminar Series: Securing Venture Capital for Sustainability-Driven Ventures: An Analysis of Funding Delay

Securing Venture Capital for Sustainability-Driven Ventures: An Analysis of Funding Delay

Speaker: Yangyang Cheng (Bocconi University)

Abstract: This study explores the longer time faced by Sustainability-Driven (SD) ventures when seeking investment from Venture Capitalists (VCs). SD ventures pursue a dual mission, generating economic returns while addressing social/environmental challenges. We argue this dual mission complicates VCs’ evaluation and introduces agency conflicts, leading VCs to delay investment to reduce uncertainty. Using the global PitchBook dataset, we find SD ventures take longer to secure VC funding than comparable ventures. Consistent with the theorized mechanism, SD ventures show greater market traction and growth when securing the first VC round, compensating for investor caution. The longer time is concentrated in the initial round, with no further delays in subsequent rounds. Finally, we show a negative correlation between time to initial VC round and venture exit and growth.