Paper Title: Does ESG Investing Help VC Funds to Attract Startups? Experimental Evidence
This paper studies how venture capitalists’ (VCs) ESG investments affect startups’ fundraising decisions, using complementary experiments with actual US startup founders. Results reveal the divergent effects of E and S. Founders are reluctant to collaborate with environmental VCs due to concerns about profitability and the likelihood of securing investment. However, founders, particularly those with ESG focus, favor social VCs partially due to their social preferences. A novel payment game experiment further confirms the existence of founders’ ESG preference in their fundraising endeavors. Lastly, there exist substantial heterogeneous effects based on founders’ political affiliations, industry backgrounds, investor gender, and market conditions.
Presenter: Ye Zhang (SSE)
Coauthors:
Discussant: Emanuele Colonelli (Booth)