Investor perspective on impact-driven startups – the prioritization of certainty

Abstract

Purpose

In this study, the authors dive into the assessment process of startups by impact investors. In particular, the purpose of this study is to investigate the preferences impact investors place on different social and environmental criteria. The authors build on social learning theory to understand the underlying rationale of the investors.

Design/methodology/approach

With this research, the authors simplify the impact category system by conducting a systematic literature review. The authors then validate these criteria with a survey of 69 impact investors in Europe.

Findings

The results highlight the prioritization of quantifying impact and a discrepancy between essential and desirable impact categories. Due to the clear and significant results changing with the target market and startup stage focus, the authors assume a tendency of homophily of impact investors.

Originality/value

With this empirical study, the authors offer strategic implications for investors and startups as the authors decrease the complexity of impact categories while validating their significance in the impact assessment process.