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The Emergence of green venture capital

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Innovative financing mechanisms are needed to facilitate sustainable development. In the past few years, socially responsible investments have emerged as a successful type of financing scheme but many ecological-oriented start-up companies remained under-funded. Apparently, environmental innovations have only recently caught the attention of an important financial sector: venture capital (VC). The article describes the emerging phenomenon of environment-related VC (or green VC) and provides an overview of the current market for this type of investment - it reveals the characteristics of the industry, its processes and mechanisms. The study also uncovers the main problems faced by entrepreneurs starting eco-oriented enterprises, as well as venture capitalists interested in such type of start-up businesses. Finally, the paper identifies the drivers for eco-innovations and analyses the potentials of green VC to expand which all resulted in a proposal for a green VC definition.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2002/2002-51.pdf

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Copyright INSEAD. All rights reserved