Driving Sustainable Growth - a New Role for the Gatekeepers of Innovation?

Abstract: This thesis examines how venture capital firms define and assess sustainability in the screening process of investment objectives and in the development of portfolio companies. Further, it investigates factors affecting the extent to which venture capital firms address sustainability. This was explored through a qualitative method consisting of two phases: a pre-study and a main-study. In the first phase, 5 experts from the venture capital ecosystem were interviewed, which was followed by 10 interviews with venture capital professionals in the second phase. The findings revealed an ambiguity in what accounts as a sustainable investment and further indicated that reaching a common understanding would be useful to promote sustainability within the venture capital industry. Moreover, no standardized approach to assess the sustainability impact of investment objectives exists thus assessment methods differed among venture capital firms. In general, the firms either adopted a holistic or niche approach, and emphasized the importance of measuring activities that have material impact. Finally, factors affecting the extent to which sustainability is addressed can be divided into internal and external pressure. The former include investment thesis, human capital and brand implication whereas the latter include market demand, limited partners, government regulation, venture capital community and market history.