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Green signals of new ventures: investigating the impact of environmental orientation on funding and the moderating role of lead venture capitalists

Author

Listed:
  • Verena Hossnofsky

    (Friedrich-Alexander-Universität Erlangen-Nürnberg)

  • Patrick-Peter Herold

    (Friedrich-Alexander-Universität Erlangen-Nürnberg)

  • Franziska Schlichte

    (Friedrich-Alexander-Universität Erlangen-Nürnberg)

  • Sebastian Junge

    (Friedrich-Alexander-Universität Erlangen-Nürnberg)

Abstract

Drawing on signaling theory, this study investigates whether the environmental orientation of new ventures serves as an important signal related to funding outcomes. Analyzing a dataset of 2003 funding rounds completed in the U.S. during 2022, our findings reveal that the environmental orientation of a new venture positively influences pre-IPO funding outcomes. Furthermore, this effect is positively moderated by the prominence of lead venture capital investors. Our post hoc analysis offers a valuable temporal perspective and suggests that our findings generalize across both early-stage and late-stage funding rounds, but not seed funding. This study contributes to the literature on financial resource acquisition and signaling theory, and also offers valuable implications for practitioners, helping them navigate the competitive funding environment more effectively.

Suggested Citation

  • Verena Hossnofsky & Patrick-Peter Herold & Franziska Schlichte & Sebastian Junge, 2025. "Green signals of new ventures: investigating the impact of environmental orientation on funding and the moderating role of lead venture capitalists," Small Business Economics, Springer, vol. 65(3), pages 1791-1810, October.
    • Handle: RePEc:kap:sbusec:v:65:y:2025:i:3:d:10.1007_s11187-025-01072-9
    DOI: 10.1007/s11187-025-01072-9
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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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