Venture Funding: Signals of Environmental Orientation and Their Interplay With Investor‐ and Country‐Level Characteristics

Environmentally oriented ventures pursue a dual mission: to create both environmental and financial value. This dual mission adds complexity and can influence ventures' funding prospects, as investors mostly pursue financial motivations. However, the environmental entrepreneurship literature is undecided on whether this relationship is positive or negative, with the latter view prevailing. We draw on signaling theory and analyze our model using a large dataset comprising 5020 unique ventures based in the United States and Europe, along with information on their investors. We find support for the minority view showing a positive relationship between venture‐initiated signals of environmental orientation and venture funding. Two contextual factors, investor environmental orientation and country‐level emissions, enhance this positive relationship. We contribute to signaling theory and environmental entrepreneurship literature.