Legitimation of Cleantech Companies: Venture Capital Financing and Federal Government Funding

Abstract

We studied 56 venture-capital-backed companies that received financial support from the U.S. Department of Energy. We argued that those companies derived their legitimacy with the DOE in large part from their lobbying in Washington and from their venture capital firms. We reasoned that the greater their legitimacy from the viewpoint of the DOE, the more federal funding they received. We found that the amount of federal funding correlated with the amount of venture capital and with the amount spent on lobbying, but not with the reputation of their venture capital firms. Companies received, on average, one dollar of federal funding for each dollar of venture capital.