Abstract:
This study examines the effect of a high-tech venture’s industry adherence to the green-tech sector on its ability to secure external equity funding. By considering the acquisition of venture capital (VC) as a two-step process, where the search for VC has the characteristics of a censoring event, we show that, despite an elevated likelihood for a venture with green-tech industry adherence to search for VC, the likelihood that it will proceed to obtain funding is decreased. Backed by a theoretical foundation in principal agent and signalling theories, a two-stage Heckman-probit model is used to disentangle between the probabilities of applying and, respectively, obtaining VC funding. This new methodological approach significantly deepens the understanding of industry influences on venture capital acquisition, thus supplying venture capitalists and entrepreneurs from the green sector with much-needed awareness of the practised selection process and how to optimally manoeuvre through its challenges.
