Startups' Strategies for Green Funding Adoption

103 Pages Posted: 12 Oct 2022 Last revised: 9 Jan 2024

See all articles by Ye Zhang

Ye Zhang

Stockholm School of Economics - Finance Department

Date Written: October 5, 2022


This paper examines how firms choose between ESG and profit-driven investors during the fundraising process within the startup-venture capital (VC) context. It employs real-stakes placement experiments with US startup founders, linking founders’ experimental behaviors with their real-world fundraising activities. While founders derive positive non-pecuniary utility from partnering with ESG VCs, VCs targeting environmental impact still struggle to attract startups due to financial reasons, with lower-quality VCs more affected. Founders believe such collaborations could hinder profitability and the likelihood of raising funding. Particularly, profit-driven startups, smaller startups, Republican founders, and startups in heavy industries demonstrate less interest in adopting green funding.

Keywords: Climate Finance, ESG, Sustainable Finance, Field Experiments, Venture Capital, Startup

JEL Classification: Q01, Q56, C91, C93, G24, L26, M13

Suggested Citation

Zhang, Ye, Startups' Strategies for Green Funding Adoption (October 5, 2022). Available at SSRN: or

Ye Zhang (Contact Author)

Stockholm School of Economics - Finance Department ( email )


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