Venture Capital – An International Journal of Entrepreneurial Finance
Special Issue: Financing SME Green and Sustainable Innovation
Robyn Owen, Middlesex University, UK ()
Catherine Deffains-Crapsky, University of Angers, France ()
Javed Hussain, Birmingham City University, UK ()
Ciaran Mac Am Bhaird, Dublin City University, Republic or Ireland ()
Recent COP Climate Change and Biodiversity forums, alongside the IPCC 2023 final report highlight the increasing requirement for rapid action to address Net Zero and the so-called UN ‘30 by 30’ target of 30% of global land and water environmental protection by 2030. Owen et al (2018, 2020, 2021) point to the need for green and sustainable innovation finance to help to address the rapid changes required of business and society to meet these targets. Others, such as Cowling and Lui (2023) and O’Reilly et al (2023) stress the importance of SME green innovation as a force for this, but also highlight the difficulties of financing this change. As Lerner (2010, 2012) compellingly argues, SME innovation is an essential driver of economic growth, and can be for green economic development, but it seldom succeeds without considerable amounts of financing. This appears to work best when the public sector joins forces with private investors to co-fund SME innovation and share the risks (Lerner, 2010; Owen and Mason, 2019; Owen, 2023). Furthermore, as the Task Forces for Climate Change (TFCC) and Nature-Related Climate Disclosure (TNFD), Central Bankers and supervisors (NGFS, 2022) and researchers (Plihon and Rigot, 2022) argue, there is a need for public and private sector collaboration to deliver a suitable framework of science-based environmental performance targets to guide the financial sector in its investment, lending and insuring risk assessment – to avoid stranded assets, reputational damage and huge financial losses associated with environmental degradation, severe weather events and flooding.
A major task for sustainable financiers – the ‘impact investors’ who are interested in making a difference to environmental, social and governance (ESG) issues – is therefore to ensure that they are able to screen and assess the impact that their investments can make (Harrer and Owen, 2022) and also understand the trade-offs between ESG impacts and the amount of investment return (Deffains-Crapsky and Marie-Jeanne, 2023). For example, business Angels, as the major first external private capital provider (which may also include e.g., accelerators and seed VCs), have an important role in impact investing. Therefore, researchers need to understand both how business angels assess their impact investments and also how these processes might be improved (Ola, Deffains-Crapsky and Dumoulin, 2019, 2022; Botelho et al, 2023).
Green investment poses particular problems, first in terms of how it is defined. Narrow definitions of cleantech, relating to renewable energies and energy efficiency applications do not fully address the complexities of addressing sustainability issues relating to overall environmental impact, with regard to addressing climate, biodiversity and resource depletion (Owen et al, 2023). The argument is made that green innovation should progress beyond do no harm and provide demonstrable positive environmental outcomes. However, since the environmental and societal impact is rarely reflected in the returns that impact investors receive (Polzin, 2017) and green impact may be difficult to calculate in relation to wider Scope (2 and 3 supply-chain) considerations beyond the impact of the company itself, this poses challenges for the calculation of circular economy resource, biosphere and just transition impacts (Owen et al, 2023).
Furthermore, disruptive ‘deeptech’ associated with many green/environmental innovations often requires capital intensive large investment with long horizon returns of 5-10 plus years (O’Reilly et al., 2022; Owen, 2023; Owen and Vedanthachari, 2023). The solutions to SME sustainable innovation financing are therefore complex, requiring consideration for place-based sustainable innovation ecosystem contexts and the role of public policy intervention to stimulate private investment, share risk and deliver effective long horizon commercialization of the technologies that can deliver Net Zero and 30 by 30.
This special issue call encourages academic theoretical, practitioner and policymaker contributions which address these issues with regard to SME green and sustainable innovation, particularly (but not exclusively) in terms of the following:
- The role of public policy to support and finance sustainable and green innovation.
- Addressing the information asymmetries which prevent assessment of risk and reward in impact investing.
- Consideration for the co-financing initiatives required to ensure longer horizon green deeptech achieves commercialization.
- Comparisons between different place-based and sectoral initiatives, their context, ecosystems and what may inform transferrable best practice
- The roles of different types of private investors in developing the impact innovation investment escalator.
- New forms of innovative private financing solutions such as green finance bonds, blockchain and green supply-chain financing, Net Zero carbon offsetting, biodiversity net gain and land habitat banking.
- Theoretical contributions to qualitative and quantitative research contributions in this field, including mixed methods approaches that may help to address understanding of complex interactions.
We welcome submissions on these and other issues arising the global Net Zero and Nature Positive environmental financing requirements for SME green innovations from a wide range of disciplinary and methodological perspectives. For an understanding of these debates, please refer to Owen et al. (2023) and also to Capizzi et al. (2021) with regard to the ethos of Venture Capital journal. Papers should be prepared according to the format specified for the Venture Capital: An International Journal of Entrepreneurial Finance.
The timeline for the Special Issue is as follows:
|01 September 2023||Issue of Call for Submissions|
|31 May 2024||Deadline for submissions for the Special Issue|
|01 July 2024||First round decisions (MAJOR) and notification to authors|
|01 September 2024||Submission of revised papers|
|01 November 2024||Second round decisions (MINOR)|
|02 January 2025||Submission of papers with minor revisions|
|01 March 2025||Final decisions on papers for Special Issue/decision to accept or not!|
|01 April 2025||Delivery of set of papers and guest editors’ introduction|
To submit papers, go to the journal website link below and press green ‘Go to submission site’ button:
Botelho T, Mason M, and Chalvatzis K. (2023) 50 Shades of Green—Angel Investing in Green Businesses, in IEEE Transactions on Engineering Management, doi: 10.1109/TEM.2022.3167282.
Capizzi, V., Bellavitis, C., and Johan, S. (2021) The evolution of Venture Capital: from early days to recent successes. Venture Capital: An International Journal of Entrepreneurial Finance 23(1): 1-3
Cowling M and Lui W (2023). Access to Finance for Cleantech Innovation and Investment: Evidence from UK Small and Medium-Sized Enterprises, IEEE Transactions on Engineering Management. DOI: 10.1109/TEM.2021.3066685
Deffains-Crapsky C. & Marie-Jeanne, C., (2023). L’investissement responsable créateur de valeur extra-financière », dans T. Cuenoud, V. Helfrich et P. Schäfer, MAIF : Orchestrer une société à mission, Edition ESKA, à paraître.
Harrer, T. and Owen, R. (2022). Reducing early-stage cleantech funding gaps: an exploration of the role of environmental performance indicators, International Journal of entrepreneurial Behavior Research, 28(9), pp. 268-288.
IPCC (2023) AR6 Synthesis Report: Climate Change 2023. The IPCC finalized Synthesis Report for the Sixth Assessment Report, March
Lerner, J. (2010). The Future of Public Efforts to Boost Entrepreneurship and Venture Capital, Small Business Economics, 35, pp. 255-264.
Lerner, J. (2012). The Architecture of Innovation: The Economics of Creative Organizations. Boston: Harvard Business Review Press
NGFS (Central Bankers and Supervisors) (2022) Central Banking and Supervision in the Biosphere: An agenda for action on biodiversity loss, financial risk and system stability. Final Report of Network for Greening Financial Systems NGFS-Inspire Study Group. NGFS-INSPIRE-Central-Banking-and-Supervision-in-the-Biosphere.pdf
Ola, A-M., Deffains-Crapsky, C. et Dumoulin, R. (2022). Cognition collective et investissement en early-stage : le cas des groupes de Business Angels, Revue de l’entrepreneuriat, 21(4), pp. 129-166.
Ola, A-M., Deffains-Crapsky, C. et Dumoulin, R. (2019). Vers une nouvelle approche de l’investissement en amorçage : un raisonnement à travers la théorie de l’alignement structurel, Finance Contrôle Stratégie, NS5, https://doi.org/10.4000/fcs.3091
O’Reilly, S., Mac an Bhaird, C. & Cassells, D. (2021). Financing Early Stage Cleantech Firms, IEEE Transactions on Engineering Management, pp. 1 – 15.
O’Reilly S, Mac an Bhaird C, Owen R and Lodh S (2022) Born-to-Be-Green: Financing Cleantech Firms in the UK. Pre-print, Available at SSRN: https://ssrn.com/abstract=4205768
Owen R, Botelho T, Mac an Bhaird C, Hussain JG, Pierrakis Y, Scott J, Lodh S (2023) Editorial: Entrepreneurial finance for green innovative SMEs. IEEE Transaction on Engineering Management 70(3): 942-949
Owen, R and Vedanthachari, LN (2023) Exploring the Role of UK Government Policy in Developing the University Entrepreneurial Finance Ecosystem for Cleantech. IEEE Transactions on Engineering Management
Owen R. (2023) Lessons from Government Venture Capital Funds to Enable Transition to a Low Carbon Economy: The UK Case. IEEE Transactions on Engineering Management
Owen R, Lodh S, Plekhanov S and Anwar O. (2022) Exploring External Finance links to Build Back Better a Green UK SME Economy. Enterprise Research Centre Research Paper 99, June
Owen R, Brennan G, Lyon F, and Harrer T. (2020) Financing Cleantech SME innovation: setting an agenda. IEEE Transactions on Engineering Management. pp. 1-5. ISSN 0018-9391
Owen R, Lehner O, Lyon F, and Brennan G. (2020) Early stage investing in green SMEs: the case of the UK. ACRN Journal of Finance and Risk Perspectives, 8 (1) pp. 163-182. ISSN 2305-7394
Owen R. and Mason M. (2019) Government Venture Capital Policies in Smaller Peripheral Economies: Lessons from Finland, New Zealand, and Estonia. Strategic Change: Briefings in Entrepreneurial Finance 28(1)
Owen R, Lyon F, and Brennan G. (2018) Enabling investment for the transition to a low carbon economy: Government policy to finance early stage green innovation. Current Opinion in Environmental Sustainability Special Issue for the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Cycle and Special Report on Global Warming Vol31: 137-145
Plihon, D. and Rigot, S. (2022). Les intermédiaires financiers publics face au changement climatique, Revue Economique, 73(2), pp. 243-266.
Polzin F (2017) Mobilizing private finance for low-carbon innovation–A systematic review of barriers and solutions. Renewable and Sustainable Energy Reviews, vol. 77, pp. 525-535
Guest Editors Bio
Robyn Owen holds a PhD from University of London and is Associate Professor of Entrepreneurial Finance at Middlesex University, London UK, where she leads the GreenFin research cluster and is deputy director of the Centre for Enterprise, Environment and Development Research (CEEDR). Robyn is also an ESRC Centre for the Understanding of Sustainable Prosperity (CUSP) research fellow and Principal Investigator of an UKRI Natural Environment Research Council grant research project examining UK SME Nature Positive Finance. Robyn is an academic advisor to Innovate UK’s green policy group, the UK Department for Business Energy Entrepreneur’s Fund, London Councils’ Green Economy Action Plan and a founder Board member of London West Innovation Network. Robyn has published widely in the field of SME green innovation and has been a journal special issue guest editor on entrepreneurial finance in Venture Capital, Strategic Change, International Journal of Entrepreneurship and Innovation and most recently IEEE Transactions on Engineering Management. https://orcid.org/0000-0003-4241-3367
Ciarán Mac an Bhaird holds a PhD from Trinity College Dublin, and is an Associate Professor of Business and Management at Dublin City University, Ireland, where he leads a large interdisciplinary team as Head of School of Fiontar (Enterprise) & Scoil na Gaeilge. Ciarán was founding director of USTART, the student Start-up accelerator programme at DCU. He has published widely in international peer-reviewed journals on the subject of Entrepreneurial Finance, specifically capital structure, financial management, resourcing nascent firms, and alternative sources of finance. Ciarán has been guest editor on a number of journal special issues, and along with Dr. Robyn Owen co-founded the Institute for Small Business and Entrepreneurship (ISBE) Entrepreneurial Finance Special Interest Group.https://orcid.org/0000-0003-2863-3398
Catherine Deffains-Crapsky holds a PhD from Nancy University in France, and is a Full Professor of Entrepreneurial Finance at Angers University, Department of Economics, Finance and Entrepreneurship, where she is co-leader of the “Strategic Changes, Risks and Financial Sustainability” research axis within the Granem Research Group. Her research focuses on the financing of innovative SMEs in the start-up phase and the behaviour of the financial actors involved (business angels, crowdfunding, etc.). As part of her work on the financing of the ecological transition, she coordinates research between The Green Finance Research Hub (Middlesex University) and Granem. Her experience within co-funded academic projects, PhD supervision and international collaboration, has led to extensive work with business angels’ groups, crowdfunders and the wider startup and SME finance ecosystem in France and cross-Europe. https://orcid.org/0000-0002-9706-6553
Javed Ghulam Hussain holds a PhD from University of Birmingham in the United Kingdom and is Professor of Entrepreneurial Finance at Birmingham City University, West Midlands, United Kingdom. He leads an Entrepreneurial Finance cluster with specific focus on supporting finance for SMEs within the UK and internationally. He has developed deep interest and understanding of diaspora finance and its impact on SME entrepreneurship in the developing and emerging economies. Professor Hussain has extensive PhD completion, examination and supporting research in Africa and Asia. He is convenor of the Annual Entrepreneurial Finance Conference at Birmingham City University in partnership with ISBE Finance Special Interest Group and entrepreneurial finance academics from Middlesex University in London and at Angers University, France. He is actively involved in cross border cooperation in Europe, Africa, and Asia. Javed has published widely and supports impact driven research outcomes. https://orcid.org/0000-0002-9111-602X