Is Green the New Gold? Venture Capital and Green Entrepreneurship
We test whether born to be green represents a signal toward potential venture capital (VC) investors on a sample of Italian, independent, unlisted, high tech entrepreneurial firms. We employ several identification strategies by controlling for the major potential signals, and the alleged selection bias between green and non green entrepreneurs. We exploit firm level information about the "active searching for VC financing" Alternatively, we exploit the cross region variation in local government laws to foster green innovations in an Instrumental Variables setting. Our results show that running a green business per se is not correlated with the likelihood to receive VC, while the perception to run a green business is strongly and positively correlated with the likelihood to get VC. When investigating the contingencies associated to the effectiveness of the born to be green signal and the entrepreneurial ability to sell it we find that only entrepreneurs who run a green business and perceive it as green are more likely to get VC funding.