Sustainable Innovation and Entrepreneurship
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Sustainable Innovation and Entrepreneurship

Edited by Rolf Wüstenhagen, Jost Hamschmidt, Sanjay Sharma and Mark Starik

In recent years our understanding of corporate sustainability has moved from exploitation to exploration, from corporate environmental management to sustainable entrepreneurship, and from efficiency to innovation. Yet current trends indicate the need for radical innovation via entrepreneurial start-ups or new ventures within existing corporations despite difficulties with the financing and marketing of such efforts. Presenting both conceptual and empirical research, this fascinating book addresses how we can combine environmental and social sustainability with economic sustainability in order to produce innovative new business models.
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Chapter 12: Cleantech Venture Investors and Energy Policy Risk: An Exploratory Analysis of Regulatory Risk Management Strategies

Mary Jean Bürer and Rolf Wüstenhagen


Mary Jean Bürer and Rolf Wüstenhagen1 Venture capital (VC) investments are an important source of financing for innovative entrepreneurial firms. The largest share of VC has traditionally been invested in a few sectors such as information and communication technology (ICT) or biotechnology. More recently, cleantech ventures are attracting increasing amounts of capital, with a particular focus on clean energy technology ventures. VC investments in clean energy can significantly accelerate the market diffusion of climate-friendly technologies such as solar energy or clean biomass. While exhibiting strong growth rates and a surge in media attention in the most recent past (see Figure 12.1), these investments still represent a small percentage of the overall VC market. In previous research (Wüstenhagen and Teppo, 2006), we identified a number of sector-specific risks as a potential barrier to increasing levels of clean energy VC investments. Given the important role of regulatory drivers for sustainability in the energy sector, it is particularly important for government to understand investors’ perceptions of the risks (and opportunities) associated with energy and climate policies and how they manage these risks. LITERATURE REVIEW Regulatory Influences on VC Investments Regulatory influences can be identified on various stages of the VC investment value chain (see Figure 12.2). Traditionally, research on the linkage between government policy and the VC market has had a relatively narrow perspective on one particular 290 Cleantech venture investors and energy policy risk 291 Venture Capital PE for companies PIPEs (private...

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