Investment attraction in deep tech startups:
the effect of sustainability
DOI:
https://doi.org/10.5585/2023.23800Keywords:
Sustentabilidade, Recursos Diferenciados, Startup Deep TechAbstract
Objective: This study aims to understand the resources that explain the attraction of investment in deep tech startups and investigate the role of sustainability as a factor in investment attraction.
Methodology/Approach: Using primary data, logistic regression analysis was applied to a sample of 220 deep tech startups located in the state of São Paulo, Brazil.
Originality/Relevance: The involvement of deep tech startups is crucial in addressing sustainability challenges, yet the extent to which this factor explains investment in startups remains uncertain. Drawing on the Resource-Based View (RBV), this research contributes to the literature by elucidating the resources that drive investments from different stakeholder groups, including partners, government, and third-party investors in deep tech startups.
Main Findings: Third-party private investors are attracted to startups that possess unique resources in the market. The investment by partners is driven by proprietary technology, while government investment is influenced by the superior performance of the startup. However, no association between sustainability and investment attraction was observed.
Theoretical/Methodological Contributions: This study provides insights into the literature on investments and resources by specifically examining how different resources guide investment decisions. Furthermore, it makes a critical contribution by highlighting the absence of a relationship between investments and sustainability.
Social/Managerial Contributions: For entrepreneurs of deep tech startups, this study underscores the importance of valuing and emphasizing different resources based on the intended type of investment, whether from partners, third-party investors, or the government. For investors in deep tech startups, it emphasizes the significance of actively directing investments toward businesses that aim to address socio-environmental issues.
Downloads
References
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120. https://doi.org/10.1177/014920639101700108
Berger, M., & Hottenrott, H. (2021). Start-up subsidies and the sources of venture capital. Journal of Business Venturing Insights, 16, e00272. https://doi.org/10.1016/j.jbvi.2021.e00272
Bertello, A., Battisti, E., De Bernardi, P., & Bresciani, S. (2022). An integrative framework of knowledge-intensive and sustainable entrepreneurship in entrepreneurial ecosystems. Journal of Business Research, 142, 683-693. https://doi.org/10.1016/j.jbusres.2021.12.054
BGC. (2021a). Deep Tech and the Great Wave of Innovation. Recuperado no 05 de agosto de 2022 de https://hello-tomorrow.org/wp-content/uploads/2021/01/BCG_Hello_Tomorrow_Great-Wave.pdf
BGC. (2021b). The Deep Tech Investment Paradox: a call to redesign the investor model. Recuperado no 05 de agosto de 2022 de https://www.hello-tomorrow-apac.org/post/the-deep-tech-investment-paradox-a-call-to-redesign-the-investor-model
Bhaird, C. M., & Lucey, B. (2010). Determinants of capital structure in Irish SMEs. Small Business Economics, 35(3), 357-375. https://doi.org/10.1007/s11187-008-9162-6
Bhide. (1992). Bootstrap finance: The art of startups. Harvard Business Review
Bocken, N. M. (2015). Sustainable venture capital–catalyst for sustainable start-up success? Journal of Cleaner Production, 108, 647-658. https://doi.org/10.1016/j.jclepro.2015.05.079
Bygrave, W. D., & Timmons, J. (1992). Venture capital at the crossroads. University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship
Cockburn, I. M., & MacGarvie, M. J. (2009). Patents, thickets and the financing of early‐stage firms: evidence from the software industry. Journal of Economics & Management Strategy, 18(3), 729-773. https://doi.org/10.1111/j.1530-9134.2009.00228.x
Colombo, M. G., & Grilli, L. (2010). On growth drivers of high-tech start-ups: Exploring the role of founders' human capital and venture capital. Journal of Business Venturing, 25(6), 610-626. https://doi.org/10.1016/j.jbusvent.2009.01.005
Endeavor. (2021). Afinal, o que é investimento anjo? Recuperado no 10 setembro 2022 de https://endeavor.org.br/dinheiro/afinal-o-que-e-investimento-anjo/
Fávero, L. P., & Belfiore, P. (2017). Manual de análise de dados: estatística e modelagem multivariada com Excel, SPSS e Stata. Elsevier Brasil
Genome, S. (2022). Ecosystems São Paulo. Recuperado no 10 setembro 2022 de https://startupgenome.com/ecosystems/sao-paulo
Gigler, S., & McDonagh, B. (2018). Financing the Deep Tech Revolution: How investors assess risks in Key Enabling Technologies (KETs). European Investment Bank.
Gompers, P. A., Gornall, W., Kaplan, S. N., & Strebulaev, I. A. (2020). How do venture capitalists make decisions? Journal of Financial Economics, 135(1), 169-190. https://doi.org/10.1016/j.jfineco.2019.06.011
Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2009). Análise multivariada de dados. Bookman editora.
Hegeman, P. D., & Sørheim, R. (2021). Why do they do it? Corporate venture capital investments in cleantech startups. Journal of Cleaner Production, 294, 126315. https://doi.org/10.1016/j.jclepro.2021.126315
Helfat, C. E., & Peteraf, M. A. (2003). The dynamic resource‐based view: Capability lifecycles. Strategic management journal, 24(10), 997-1010. https://doi.org/10.1002/smj.332
Hoenig, D., & Henkel, J. (2015). Quality signals? The role of patents, alliances, and team experience in venture capital financing. Research Policy, 44(5), 1049-1064. https://doi.org/10.1016/j.respol.2014.11.011
Hulsink, W., & Scholten, V. (2017). Dedicated funding for leasing and sharing research and test facilities and its impact on innovation, follow-on financing and growth of biotech start-ups: the Mibiton case. Venture capital, 19(1-2), 95-118. https://doi.org/10.1080/13691066.2017.1261454
InvestSP. (2020). Inovação, ciência e tecnologia. Recuperado no 05 de setembro 2022 de https://www.investe.sp.gov.br/por-que-sp/inovacao-ciencia-e-tecnologia/#:~:text=Em%202018%2C%20de%20acordo%20com,dessa%20rubrica%20pelos%20estados%20brasileiros.
Islam, M., Fremeth, A., & Marcus, A. (2018). Signaling by early stage startups: US government research grants and venture capital funding. Journal of Business Venturing, 33(1), 35-51. https://doi.org/10.1016/j.jbusvent.2017.10.001
Kriz, A., Rumyantseva, M., & Welch, C. (2022). How science-based start-ups and their entrepreneurial ecosystems co-evolve: A process study. Industrial Marketing Management, 105, 439-452. https://doi.org/10.1016/j.indmarman.2022.06.011
Lange, D. E. (2017). Start-up sustainability: An insurmountable cost or a life-giving investment? Journal of Cleaner Production, 156, 838-854. https://doi.org/10.1016/j.jclepro.2017.04.108
Leendertse, J., van Rijnsoever, F. J., & Eveleens, C. P. (2021). The sustainable start‐up paradox: Predicting the business and climate performance of start‐ups. Business strategy and the environment, 30(2), 1019-1036. https://doi.org/10.1002/bse.2667
Luo, X., Huang, F., Tang, X., & Li, J. (2021). Government subsidies and firm performance: Evidence from high-tech start-ups in China. Emerging Markets Review, 49, 100756. https://doi.org/10.1016/j.ememar.2020.100756
Madsen, H., Neergaard, H., & Ulhøi, J. P. (2008). Factors influencing the establishment of knowledge‐intensive ventures. International Journal of Entrepreneurial Behavior & Research. https://doi.org/10.1108/13552550810863062
Mann, R. J., & Sager, T. W. (2007). Patents, venture capital, and software start-ups. Research Policy, 36(2), 193-208. https://doi.org/10.1016/j.respol.2006.10.002
Marcus, A., Malen, J., & Ellis, S. (2013). The promise and pitfalls of venture capital as an asset class for clean energy investment: Research questions for organization and natural environment scholars. Organization & Environment, 26(1), 31-60. https://doi.org/10.1177/1086026612474956
Mazzucato, M., & Semieniuk, G. (2018). Financing renewable energy: Who is financing what and why it matters. Technological Forecasting and Social Change, 127, 8-22. https://doi.org/10.1016/j.techfore.2017.05.021
Miozzo, M., & DiVito, L. (2016). Growing fast or slow?: Understanding the variety of paths and the speed of early growth of entrepreneurial science-based firms. Research Policy, 45(5), 964-986. https://doi.org/10.1016/j.respol.2016.01.011
Nedayvoda, A., Delavelle, F., So, H. Y., Graf, L., & Taupin, L. (2021). Financing Deep Tech. Recuperado em 01 de setembro de 2022 de https://efaidnbmnnnibpcajpcglclefindmkaj/https://openknowledge.worldbank.org/bitstream/handle/10986/36566/Financing-Deep-Tech.pdf?sequence=1&isAllowed=y
Neville, C., & Lucey, B. M. (2022). Financing Irish high-tech SMEs: The analysis of capital structure. International Review of Financial Analysis, 83, 102219. https://doi.org/10.1016/j.irfa.2022.102219
Nguyen, N. P., & Adomako, S. (2021). Environmental proactivity, competitive strategy, and market performance: The mediating role of environmental reputation. Business Strategy and the Environment, 30(4), 2008-2020
Organisation for Economic Co-operation and Development. (2020). Blended Finance Principles Guidance. Recuperado em 01 de setembro de 2022 de https://www.oecd.org/dac/financing-sustainable-development/blended-finance-principles/guidance-and-principles/
Pavani, C. (2003). O capital de risco no Brasil: conceito evolução perspectivas: Editora E-papers.
Pisano, G. P. (2010). The evolution of science-based business: innovating how we innovate. Industrial and corporate change, 19(2), 465-482. https://doi.org/10.1093/icc/dtq013
Rin, M., & Penas, M. F. (2007). The effect of venture capital on innovation strategies. Mass, USA: National Bureau of Economic Research Cambridge.
Schaltegger, S., & Wagner, M. (2011). Sustainable entrepreneurship and sustainability innovation: categories and interactions. Business strategy and the environment, 20(4), 222-237. https://doi.org/10.1002/bse.682
Singh, S., & Subrahmanya, M. B. (2022). Quantum of finance obtained by tech startups over the lifecycle: an analysis of its determinants. International Review of Applied Economics, 36(2), 187-204. https://doi.org/10.1080/02692171.2021.1945549
Tiba, S., Rijnsoever, F. J., & Hekkert, M. P. (2021). Sustainability startups and where to find them: Investigating the share of sustainability startups across entrepreneurial ecosystems and the causal drivers of differences. Journal of Cleaner Production, 306, 127054. https://doi.org/10.1016/j.jclepro.2021.127054
Zahra, S. A. (2021). The Resource-Based View, Resourcefulness, and Resource Management in Startup Firms: A Proposed Research Agenda. Journal of management, 47(7), 1841-1860. https://doi.org/10.1177/01492063211018505
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Autores
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
The author (s) authorize the publication of the manuscript in the journal;
The author (s) guarantee that the contribution is original and unpublished and that it is not being evaluated in another journal (s);
The journal is not responsible for the opinions, ideas and concepts emitted in the texts, as they are the sole responsibility of its author (s);
Editors reserve the right to make textual adjustments and adapt to the publication's rules.
Authors retain the copyright and grant the journal the right to first publication, with the work simultaneously licensed under the Creative Commons Attribution License - 4.0 (CC BY-NC-SA 4.0) that allows the sharing of the work with acknowledgment of authorship and initial publication in this magazine.
Authors are authorized to assume additional contracts separately, for non-exclusive distribution of the version of the work published in this journal (eg, publishing in institutional repository or as a book chapter), with acknowledgment of authorship and initial publication in this journal.
Authors are allowed and encouraged to publish and distribute their work online (eg in institutional repositories or on their personal page) at any point before or during the editorial process, as this can generate productive changes, as well as increase impact and citation of the published work (see “The Effect of Open Access” at http://opcit.eprints.org/oacitation-biblio.html).
Authors can use ORCID for identification. An ORCID identifier is unique to an individual and acts as a persistent digital identifier to ensure that authors (particularly those with relatively common names) can be distinguished and their work appropriately assigned.
