Sustainability in Venture Capitalists' Investor Sensemaking Regarding New Ventures: A Multiple Case Study Investigation of the Impact of Sustainability on the Legitimacy and Identity of Early-Stage New Ventures and the Investor Sensemaking of Early-Stage Venture Capitalists

Kathleen Lameter & Emily Maria Goehlmann

Student thesis: Master thesis


Sustainability is a growing trend in society and politics. The trend pressures new ventures (NVs) and venture capitalists (VCs) to integrate sustainability measures and ESG practices. This thesis explores how sustainability impacts legitimacy and identity in the context of early-stage NVs and the investor sensemaking of VCs. The thesis does so through a qualitative multiple case study based on interviews with founders of NVs, early-stage VCs and industry specialists, combining it with a systematic literature review (SLR) on sustainability in early-stage NVs and VCs. The findings are situated in a developed theoretical framework, which allows for understanding the interplay of legitimacy, identity, and investor sensemaking. In doing so, this thesis found that the context of sustainability complicates investor sensemaking due to a vicious cycle of hindrances which includes e.g., a lack of guidance and knowledge on sustainability as well as differing understandings of sustainability. These hindrances make VCs mostly perceive sustainability factors as different from their typical decision-making process, which dominantly focuses on economic metrics. Furthermore, the findings showed heterogeneity in the VC scene in the context of sustainability, highlighting the complexity of legitimacy and NV identity. The findings of the interviews in connection with theory and literature imply a need from practitioners and academia to break the vicious cycle of hindrances and establish a common guidance and understanding to enable a deep sustainability and ESG integration in early-stage NVs and VCs.

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
Publication date2022
Number of pages122
SupervisorsKristjan Jespersen