Survival Of The Greenest? Life Cycles Of Green And Non-Green Start-Ups In Germany

.Green start-ups are frequently portrayed as major drivers of the sustainable revolution, yet little is known about their true risk of insolvency. Using a population-wide register dataset of 30, 523 German startups, the failure rates of green and non-green startups are compared. While there is a theoretical argument that a commitment to sustainability provides legitimacy and access to patient capital, the empirical evidence is still scarce and dependent on the context and ecosystem. The results are striking. Using survival analysis, it is shown that green startups are significantly more likely to fail than non-green startups both in the short and long term. These time patterns are consistent: green startups are more likely to go into insolvency than non-green startups not only during the first years of life but also at later stages of firm development. This evidence challenges the existence of a green survival premium and suggests a liability of newness and greenness; that is, engaging in sustainability makes startups more unstable throughout their life cycle. Overall, these findings provide a more refined comprehension of sustainable entrepreneurship by highlighting the structural and persistent nature of the risks of failure of green startups. They also invite governments and investors to reconsider their policies of support and to develop long-term instruments that better match the specific risk profiles and capital needs of sustainability-oriented startups.