Entrepreneurship Ecosystem Insights
  • Home
  • Content
    • Perspectives
    • Innovative Programs & Policies
    • Research You Should Know
    • In Case You Missed It
  • About Endeavor
    • Our Mission
    • Our Model
    • Our Entrepreneurs
    • Insight & Research
    • Investor Network
    • Programs
    • Our Background
    • FAQS
  • About EEI
Research You Should Know 0

Three Factors that Help Green Companies Get Funded

By Endeavor Insight · On December 23, 2019

Global concerns of depleting natural resources and climate change have created growing market pressures for companies to operate in a more sustainable manner. Entrepreneurial companies bring a myriad of economic and social benefits to the economy and those that focus solely on environmental concerns can be leveraged to build a greener business world. 

In order to understand what factors help more entrepreneurs receive capital investment for their green companies, Boris Mrkajic, Samuele Murtinu, and Vittoria G. Sealera analyzed 361 green companies founded between 1983 and 2008 and their investment patterns in a recent study published in the Small Business Economics Journal. 

As defined by the article, green companies are companies that use technologies that provide environmental benefits meant to substitute traditionally-used technologies. Alternatively, they are companies that offer products and services that strive to protect the natural environment by conserving resources and reducing pollution. Green companies face higher barriers to receiving investment than their counterparts, mostly due to higher market ambiguity, higher technological complexity, and longer investment durations.

The study found three types of green companies that are more likely to receive funding. 

Companies that use green technologies and position themselves within the green sector

Entrepreneurs that simultaneously utilize green technologies and position their company in a green sector are more likely to get capital funding — there was a 7 percent increase in likelihood of receiving funding for these types of companies compared to companies that use green technologies in non-green sectors, or are non-green companies positioned within a green sector. For example, a company producing solar panels within the renewable energy sector is more likely to receive funding than a company producing a decomposable product in the consumer goods sector.

Companies that are academic spin-outs

Results show an increase in the likelihood of receiving funding among green companies that are academic spin-outs, a correlation that is specific to green companies. The authors suggest that this may be connected to the company’s access to cutting-edge research methodologies and technological development. The credibility accredited by a university may also help to fill in the information gap between an investor and a green company. 

Companies that have corporate shareholders

Green companies that have corporate shareholders are particularly important in attracting outside investment for entrepreneurs and their green businesses. Similar to the role that universities play, corporate shareholders provide ‘a stamp of approval’ that indicate to investors the commercial potential of a green company’s business model and product. 

Conclusion

Green companies are a part of a disruptive sector that is likely to produce revenues for their investors given the changing ideological and consumer global market. In addition to their economic benefits, having more green businesses, less resource depletion and higher levels of awareness of climate change can yield critical social benefits for the economy and society at large.

Contributed by Penmai Chongtoua

The full report can be accessed here.

Print Friendly
Share Tweet

You Might Also Like

  • Research You Should Know

    Place-Based Innovation Policies are Important for Building Entrepreneurial Ecosystems

  • Research You Should Know

    Middle American Cities Are Some of the Nation’s Largest Talent Generators

  • Research You Should Know

    National Governments Want More Companies to Scale

No Comments

Leave a reply Cancel reply

Subscribe to our monthly update

  • Popular
  • Comments
  • Tags
  • How Can Decision Makers Foster Productive Entrepreneurship Communities?

    October 29, 2018
  • Three Tips for Entrepreneurship Policy-Makers from Philip Auerswald

    October 14, 2015
  • The Three Most Important Resources Companies Need to Succeed

    March 10, 2014
  • Start-Up Chile: Heading toward Failure or Success?

    September 9, 2014
  • How Five Percent of Kenyan Companies Can Help Create 3.9 Million Jobs

    May 11, 2015
  • How Local and State Governments Can Best Support Entrepreneurship

    April 15, 2015
  • ride says: Тhanks for finally writing about >The Three Most Important Resourϲes Compan...
  • American Dreamers says: Very insightful article. This can help out all aspiring ...
  • Steven Koltai says: In my work in 36 countries over the past 8 years beginning as the first Senior...
  • Mark Neild says: Of course it may be that just providing entrepreneurs in developing countries ...
  • Endeavor Insight says: Thank you, Julia! Big hugs from Team Insight....
entrepreneurial ecosystem entrepreneurship ecosystems access to finance entrepreneurship startups access to capital jobs scaleups entrepreneurship policy research success high-growth firms economic growth smes public policy economic development europe high-growth

Perspectives

  • Network Building Sets Women Entrepreneurs Up for Success

    February 12, 2020
  • Emerging Fintech Entrepreneurship in the African Remittance Market

    June 29, 2017
  • Xavier Niel is Building the World’s Largest Startup Incubator in Paris

    May 26, 2016

Innovative Programs & Policies

  • How Social Entrepreneurs ‘Zig-Zag’ Their Way to Scale

    December 5, 2019
  • Five Ways for Entrepreneurship Support Programs to Become More Effective

    November 22, 2019
  • What Types of Companies Have the Strongest Impact on Economic Growth?

    June 7, 2019

Research You Should Know

  • Place-Based Innovation Policies are Important for Building Entrepreneurial Ecosystems

    March 30, 2020
  • Middle American Cities Are Some of the Nation’s Largest Talent Generators

    March 23, 2020
  • National Governments Want More Companies to Scale

    March 12, 2020

In Case You Missed It

  • What Is the Typical Career Path of CEOs at Large Firms?

    July 24, 2019
  • The Fintech Sector is Rapidly Expanding in Latin America

    June 25, 2018
  • Scaling Entrepreneurs Drive Innovation in Emerging Markets

    June 7, 2018

Endeavor

To learn more about Endeavor and our worldwide network of high-growth companies please visit our website.

© Endeavor 2019. All rights reserved.