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

72 Pages Posted: 12 May 2021 Last revised: 14 Jul 2022

See all articles by Sasan Mansouri

Sasan Mansouri

University of Groningen - Faculty of Economics and Business; Goethe University Frankfurt; Halle Institute for Economic Research

Paul P. Momtaz

Technische Universität München (TUM) - TUM School of Management; University College London Center for Blockchain Technologies; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: May 12, 2021

Abstract

Sustainable Entrepreneurship (SE) seeks to attain 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.

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

University of Groningen - Faculty of Economics and Business ( email )

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Goethe University Frankfurt ( email )

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Halle Institute for Economic Research

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Paul P. Momtaz (Contact Author)

Technische Universität München (TUM) - TUM School of Management ( email )

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Germany

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
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London, London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Munich, DE-81679
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