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Financing green innovation startups: a systematic literature review on early-stage SME funding
Abstract
This paper investigates the critical issue of financing early-stage green startups, examining the types of investors and finance models available, the challenges these startups face, and how the green finance ecosystem can better support early-stage investment. Utilizing a systematic literature review (SLR) methodology, we provide a comprehensive analysis of the current landscape. Our findings reveal a significant paucity of data and a bias towards well-established North American and European ecosystems, while highlighting an emerging diversity in private finance sources post-Global financial crisis (GFC), including grants, equity, and crowdfunding. Despite this, there remains a heavy reliance on public funding and a lack of evidence regarding its impact. The inherent characteristics of cleantech–high capital expenditure, long investment horizons, and disruptive nature–necessitate innovative public financing instruments and policies to reduce risk and attract private investment. Our theoretical contribution highlights the necessity for interdisciplinary research and policy collaboration to develop a holistic entrepreneurial finance (entfin) ecosystem. This approach should integrate quantitative economic and qualitative behavioural finance research to address information asymmetries and improve the green economy policy mix. Such a framework will support public-private co-financing, enhance stakeholder engagement, and provide evidence for policy decisions, facilitating more rapid commercialization of cleantech innovations for environmental sustainability.
Type
Journal Article
Type of thesis
Series
Citation
Mukherjee, A., Owen, R., Scott, J. M., & Lyon, F. (2024). Financing green innovation startups: a systematic literature review on early-stage SME funding. Venture Capital : an International Journal of Entrepreneurial Finance. https://doi.org/10.1080/13691066.2024.2410730
Date
2024
Publisher
Taylor & Francis
Degree
Supervisors
Rights
© 2024 The Authors. Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution - NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/).