Green technology innovation : the perspectives of venture capital

University essay from SLU/Dept. of Economics

Abstract: Technology has contributed greatly to our environmental problems, but also has a key role to play in solving those problems. While proper financing is an enabler for development, lack of financing is an important constraint. Innovations reach the so-called valley of death after demonstration of a commercially viable product - when capital demands are high but there is a low ability to obtain funding. Understanding investors’ perspectives in this space enables more effective legislation to incentivize investment, addresses the disconnect between investor and innovator, and provides a framework for other investors who wish to engage. This research develops a grounded theory to describe the perceived risks and drivers of early stage venture capital investors. Theory was developed through a combination of literature review and semi-structured interviews. The findings reveal the complexity of the topic and that perspectives vary between investors. Common drivers include financial return and solving important issues. Quality entrepreneurs, policy, and defensibility can be either drivers or risks depending on the circumstances. Other perceived risks are technology risk, market risk, incumbent actors and capital intensity. Further research can serve to confirm and build upon these results.

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