Financing Sustainable Entrepreneurship: ESG Measurement, Valuation, and Performance in Token Offerings

55 Pages Posted: 12 May 2021 Last revised: 19 Jun 2021

See all articles by Sasan Mansouri

Sasan Mansouri

Goethe University Frankfurt - Department of Finance

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management; University College London Center for Blockchain Technologies

Date Written: May 12, 2021

Abstract

Sustainable Entrepreneurship (SE) targets profitability and sustainability goals. A major research gap concerns SE’s economic attractiveness for entrepreneurs and investors. The question is ambiguous because sustainability orientation creates costly constraints, while startups cannot fully appropriate their positive externalities. We relate startups’ Environment, Society, and Governance (ESG) properties obtained from a machine-learning approach (www.SustainableEntrepreneurship.org) to SE valuation and performance in token offerings. Startups with salient ESG goals are able to raise financing at more favorable valuations, incentivizing entrepreneurs to adopt ESG goals in the first place. However, their post-funding performance is weaker than in conventional startups, suggesting that investors incur a relative financial loss for backing sustainability-oriented entrepreneurs. The funding and post-funding performance is weaker in startups with high degrees of technological, network, and governance for- malization.

Keywords: Sustainable Entrepreneurship, Sustainability, ESG, Token Offering, Initial Coin Offering (ICO), Entrepreneurial Finance, Crowdfunding, Machine Learning

JEL Classification: L26, M13, Q01, Q56

Suggested Citation

Mansouri, Sasan and Momtaz, Paul P., Financing Sustainable Entrepreneurship: ESG Measurement, Valuation, and Performance in Token Offerings (May 12, 2021). Available at SSRN: https://ssrn.com/abstract=3844259 or http://dx.doi.org/10.2139/ssrn.3844259

Sasan Mansouri

Goethe University Frankfurt - Department of Finance ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
+49(0)6979833727 (Phone)

HOME PAGE: http://www.sasanm.de

Paul P. Momtaz (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London
United Kingdom

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