Abstract
Sustainable startups that are seeking to commercialize a clean technology have the potential to make more environmentally friendly futures possible. Clean technology companies, in spite of the significant financial risks they pose, are rapidly attracting venture capital from corporations. Within the scope of this study, we analyze the who, what, where, and why of venture capital investments in enterprises specializing in environmentally friendly technologies. Between the years 1999 and 2012, there were a total of 26 instances of multinational firms investing in Norwegian clean technology businesses. The results of this research push the limits of what has previously been known about corporate venture capital. The widespread presumption that investors in corporate venture capital are all the same is called into question by these findings. The first thing that it establishes is that SMEs are some of the most prominent participants in the market for corporate venture capital. Second, it demonstrates that there is a greater variety of motives to invest than was previously imagined, which is an essential takeaway from this finding. This research makes a contribution to the existing body of knowledge on sustainable development by presenting empirical evidence that large firms allocate corporate venture capital to support corporate greening in order to maintain their competitive advantage.
Keywords: Clean technology, corporate venture capital, cleantech startups
Introduction
The sustainable start-ups and their environmentally positive approaches will shape a greener future. The ventures are able to reform industries and, to a large extent, address environmental issues. Sustainable businesses that have developed clean energy technologies for a greener and more livable planet are referred to as clean technology start-ups. In such a way, the significance of sustainable startups is not disputed. These startups assume a critical role in spurring change amidst the growing consciousness of environmental matters on the globe (Muo & Azeez, 2019). Clean technology is not just about good business sense to them but making the world healthier and more vital to face all uncertainties.
Nevertheless, these sustainable startups do not sail on smooth waters. However, they are confronted by one major hurdle that entails significant capital risk involved in the introduction of clean technologies into the consumer market. However, there is an incredible attractiveness of venture capital in particular from corporate bodies that recognize the high rewards opportunities available from clean technology industry investment. This forms the basis upon which we critically look at the current corporate investment environment. There is an appreciable shift in the investment pattern as more money goes towards green start-up businesses. An understanding of these shifts is required to understand how the process of commercialization of clean technology is changing by venture capital.
Problem Statement
The central challenge for sustainable startups is the contradiction between taking financial risks and attracting venture capital. Exploring this land calls for extensive knowledge of the incentives that make firms embrace green technologies. The problem at hand is two-fold: firstly, what are the best ways for startups to mitigate the financial risks that come with developing and growing on clean technologies? Secondly, what are the factors that cause the change in investment trend towards green technology ventures? Corporate investment, traditionally risky, is in the transformation towards its understanding from corporations which see strategic profits costs for the corporation. This gives a new meaning to assumptions about rewards and risks in a sustainable startup context.
Literature Review
The clean tech comprises an essential element in the worldwide struggle for sustainability. With respect to environmentally friendly measures, these companies comprise numerous sectors in one way or another (Ikram et al., 2021). The use of renewable forms of energy, resource efficiency, and waste elimination characterizes clean technology ventures. These companies have operated where innovation meets with environmental conservation by providing technology solutions to critical environmental issues. Therefore, there is a need to contextualize their role in the bigger picture of eco-entrepreneurship by understanding the characteristics of clean tech firms.
This goes beyond defining clean technology companies but explains the trends and growth rates in this market segment. Clean technology has recently grown into a significant sector due to growing concerns about the environment and some legislations that enforce green activities. Eco-friendly trends are evident in market trends, which create a niche for new entrants that are innovative and smart. The path that cleantech firms take reveals in greater detail how they move through the intricate realm of both commercial and ecological spheres in the economy (Ikram et al., 2021).
Sustainable entrepreneurship also encompasses venture capitalist participation in the clean-technology space. Venture capital boosts innovations and helps bring clean technology into the market space. Some general venture capital trends reveal a growing attention towards “green” start-ups. The clean technology sector is realizing that it provides opportunities for positive returns as well as positive impacts on the environment.
On the other hand, the terrain has its share of problems. Clean technology ventures have their unique investor issues, which emerge from the uncertain nature of innovations as well as from the complexities in the marketplace. In their relationship, both investors and entrepreneurs must appreciate the balance between risks and returns that form the basis of this sector. Understandings of corporate venture capital constitute a basis for understanding what motivates and prompts large corporations to invest in young, clean technology start-ups. The findings of these studies expand the body of knowledge about the emerging linkage between sustainable entrepreneurship and venture capital.
Research Objectives
The knowledge of the different stakeholders in the clean technology ventures will enable one to comprehend the workings of that industry. Two primary categories of stakeholders emerge prominently: multinationals and SMEs. Multinationals are essential players in influencing the direction in which clean technology development takes. This involvement shapes market dynamics, offers essential supplies, and shapes the course of the clean technologies industry. On the other hand, SMEs participate in innovation by providing innovativeness, agility, and new ideas. Therefore, analyzing the functions of these stakeholders enables a person to understand clean technology market competition and cooperation.
CVC is, therefore the new dimension of the investments that big companies undertake start-up financing for innovation purposes and competitiveness. A worthwhile research objective within the context of clean technology ventures is to shed light on the reasons why corporations support environmental start-up businesses. Two overarching motivations come to the forefront: this refers to competitive advantage and corporate social responsibility programs.
One of the main reasons for corporate venture capital investments in clean technology is the quest for competitive advantage (Bianchini & Croce, 2022). Corporations have perceived the opportunity to get an edge by partnering and financing innovative start-ups in cleantech. The purpose of this research is to explore how organizations gain a competitive advantage through their use of investment management techniques and approaches. A consideration of how clean technology investments improve the competitiveness of corporations over time gives some idea of the connection between sustainability and business strategy.
Not only have these companies become environmentally responsible, but also for profit. Corporate greening is the integration into the primary company activities of sustainable development and sustainable entrepreneurship. The objective here is to establish the ways and extent to which venture capital investments by businesses in clean technology enhance the greenery of the companies. Understanding the drives behind such endeavors sheds light on the inherent conflict between being profitable and responsible towards the environment. This study seeks to shed light on the complexity of the interplay between clean technology companies and their corporations in an effort to contribute to a multi-dimensional view of these relationships.
Methodology
Our study is based on 1999–2012, which is the specified period for the exploration of venture capital investments in clean technology Norwegian startups (Muthee, 2023). It encompasses some of the most important points that affect the development of a new business and corporate venture capital in this industry. In concentrating on these years, we hope to paint a full picture of how the events that marked this formative era played out. However, it is vital that we clearly identify and choose multinational firms from our data collection strategy. Specific criteria will be applied so that only big multinational corporations are incorporated in our survey. These could include things like their revenues, locations, or importance in a particular sector. Strictly, this will help identify the major multinational actors who contributed in investments in Norwegian clean technology firms during the specified period.
We study 26 cases of VC investments in Norwegian clean tech firms dating back to 1999–2012. In this regard, each of the cases provides a micro view of what led to the motive behind the investments, the strategies used as well as resultant outcomes (Muthee, 2023). This makes the analysis of such cases a very good data set for both quantitative as well as qualitative studies. In this quantitative aspect, we analyze the financial context of the twenty-six cases of investment. The evaluation considers the extent of capital investment, financial outcomes recorded by cleantech startups after the funding stage, as well as existing patterns and trends observed during the study period. The main goal here is to uncover relevant quantitative data about venture-capital activity towards clean technologies relying on statistical techniques.
The qualitative aspects of this investigation aim to open up for the reasoning behind decisions made by MNCs to invest in Norwegian CTC enterprises. This is an elaborative study of corporate strategies, mission statements issued, and public declarations by these entities. It can also involve interviews with the critical representatives of the company which gives more information compared to monetary reasoning.
Results
An overview of foreign companies investing in Norway into clean technologies reveals an interesting mix of partnering relationships. This has resulted in many companies across different sectors being interested in engaging in green technology venture support. The industry convergence cuts across the segments of energy, manufacturing, and technology (Andersen & Gulbrandsen, 2020). Besides this, the wide range is indicative not only on the wide spread of clean technology but also that sustainability involves a joint effort among the different industries separated usually in practice.
This offers an understanding of the global facet of these foreign direct investments regarding the geography of multinational firms investing in Norway’s clean technology sector. These companies are not just within the country since they portray an attempt to interact and support the Norwegian cleantech market.” The regional map presents a transnational web of actors that help in internationalizing clean tech start-ups. This helps us comprehend how and why multinational firms from different parts of the world invest in Norwegian clean technology firms.
Motivations of multinational corporations investing in Norwegian clean technologies are varied and diverse. However, gaining a competitive edge is paramount. They realize that the partnership with upcoming innovation-oriented clean-technology ventures may improve their positions in the markets. These corporations hope to differentiate themselves from other corporations and tap into a highly demanded market segment driven by customers’ desire for eco-friendly technologies. The clean tech industry is driven by the strategic pursuit of corporate venture capital, which highlights that it is an attempt at competitive advantage(Andersen & Gulbrandsen, 2020).
Our analysis shows that investment in company greenness is a major motive beyond pursuing of competitive advantage. Investments in clean technology startups mirror these trends as multinational firms increasingly integrate sustainable development into their business strategies. This goes beyond profit making, demonstrating concern for business stewardship by contributing constructively to issues surrounding environmental management. These findings show that these investments are an integral part of larger corporate sustainable agenda. The economy cannot be successful without environmental protection.
Discussion
Our findings have some far-reaching implications that question a lot about how CVC has been perceived until now. Previously, CVC is understood to be homogeneous with single motives. Our analysis shows a differentiated environment within which the MNCs have various reasons for investing in Norwegian green tech companies. Such a claim, however, contradicts the conventional perception that commercial venturing companies make their investments predominantly for monetary reasons. On the other hand, our results seem to show that strategic and environmental motives rather underlie the trends of corporate participation in CleanTech (Battisti et al.,2022) . However, questioning these assumptions presents opportunities to expand the understanding of how corporations and sustainable entrepreneurship interact.
Our findings also indicate that small and medium enterprises are key players in the corporate venture capital market. Unlike the general impression that big corporations take the lead with regards to the CVC investments, we noted through our study that the small and medium enterprises (SMEs) were also key players in the cleantech venture industry. This contests the idea that only global corporations act as leaders of innovation and sustainability. Small and medium enterprises are significant because they are dynamic, innovative, and flexible towards promoting growth and development of the clean technology industry. The analysis of the support system for sustainable entrepreneurship in the market enhances the knowledge on the significance of small and medium-sized enterprises (SMEs).
The comparison of our findings with past studies evinces a sharp difference in the rationale for the investments into CVC and clean technology. Whereas common sense usually linked such investments only with profit motives, we find the list of motivations for these actions to be broader (Battisti et al.,2022). These motivations go beyond immediate profits, pursuing competitive advantages and active engagement in corporate greening initiatives. Such departure from conventional beliefs suggests that companies are viewing clean technology as a strategic investment and not just in the context of short-term sustainability. Comparison shows how variable and situational is CVC motivations in this complex territory of green business.
Our study provides empirical evidence, demonstrating how big corporations channel their corporate venture capital in line with the drive for corporate greening. These findings highlight the link between economy and environment. In doing so, we add to the debate that concerns business and sustainable development. The contribution made by this study is that it goes beyond the rhetorical and into substantive investment strategies that support more robust corporation-led transformations towards sustainability.
Conclusion
Lastly, our investigation concerning venture capital investments in Norwegian clean tech start-ups from 1999 – 2012 offers valuable information about how corporations involve in sustainable entrepreneurship. Multinational companies investing in Norwegian CleanTech show a fairly wide cross-sectional and international involvement in support of environmental innovations. The nature of these investments poses questions about conventional theories about corporate venturing capital, demonstrating how enterprises must attain a competitive edge while engaging in corporate greening activities. Moreover, the paper emphasises on importance of SMEs’s role and contribution towards making headway into the market of the corporate venture capitals, replacing the large businesses that have always dominated it.
The study adds value to the body of knowledge on corporate venture capital as it challenges traditional assumptions about this domain and provides an insightful analysis of the underlying dynamics driving the investments. These results provide information about the mutual dependence of large corporations and the green energy sphere, indicating what factors contribute to such collaborations. In this connection, SMEs are important in sustaining a sustainable entrepreneurship ecosystem and broadening our knowledge of it. This study helps build a broader understanding of how corporations, big and small, play a crucial role in creating the clean technology landscape.
Based on these results, there are a number of ways in which further research may improve our knowledge surrounding the relationship between enterprises and cleantech start-ups. However, research that explores the long-term effects of the venture capital investments in clean technology start-up’s financial success as well as the sustainability outcomes would be very relevant in this case. Secondly, an in-depth examination of the particular strategies that MNCs use to gain a competitive edge over their investment can provide tangible solutions to the corporations and entrepreneurs also. Finally, it shows third way of looking at external factors that are relevant to the picture–the role of government policies and regulation on corporate venture capital in the CTS. To conclude, this study establishes a basis for subsequent exploration on the emerging trends in eco-entrepreneurship and collaborative efforts by corporate towards clean tech ventures. Researchers will be able to dig more on those front areas for further growth towards knowledge base that encompasses the academic discussion and real life decisions related to EIIs.
References
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Bianchini, R., & Croce, A. (2022). The Role of Environmental Policies in Promoting Venture Capital Investments in Cleantech Companies. Review of Corporate Finance, 2(3), 587–616. https://doi.org/10.1561/114.00000024
Battisti, E., Nirino, N., Leonidou, E., & Thrassou, A. (2022). Corporate venture capital and CSR performance: An extended resource based view’s perspective. Journal of Business Research, 139, 1058–1066.
Ikram, M., Ferasso, M., Sroufe, R., & Zhang, Q. (2021). Assessing green technology indicators for cleaner production and sustainable investments in a developing country context. Journal of Cleaner Production, 322, 129090. sciencedirect. https://doi.org/10.1016/j.jclepro.2021.129090
Muo, I., & Azeez, A. A. (2019). GREEN ENTREPRENEURSHIP: LITERATURE REVIEW AND AGENDA FOR FUTURE RESEARCH. International Journal of Entrepreneurial Knowledge, 7(2). https://doi.org/10.37335/ijek.v7i2.90
Muthee, C. (2023). Corporate Venture Capital on Sustainability-oriented Innovation: A Norwegian perspective. Uis.brage.unit.no. https://uis.brage.unit.no/uis-xmlui/handle/11250/3089234
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