Assessing mission drift at venture capital impact investors

Abstract

In this article, we consider a recent trend whereby private equity available from venture capital (VC) firms is being deployed toward mission‐driven initiatives in the form of impact investing. Acting as hybrid organizations, these impact investors aim to achieve financial results while also targeting companies and funds to achieve social impact. However, potential mission drift in these VCs, which we define as a decoupling between the investments made (means) and intended aims (ends), might become detrimental to the simultaneous financial and social goals of such firms. Based on a content analysis of mission statements, we assess mission drift and the hybridization level of VC impact investors by examining their missions (ends/goals) and their investment practices (means) through the criteria of social and financial logic. After examining eight impact‐oriented VC investors and their investments in 164 companies, we find mission drift manifest as a disparity between the means and ends in half of the VC impact investors in our sample. We discuss these findings and make suggestions for further studies.

Educating for self‐interest or ‐transcendence? An empirical approach to investigating the role of moral competencies in opportunity recognition for sustainable development

“…Nevertheless, when setting aside these more extreme outcomes, it seems as if involving other parties or stakeholders and motivations for investing in sustainability surface the most within the process of recognizing opportunities for SD . A recent study by Cetindamar and Ozkazanc‐Pan () shows that the latter, investment for impact, has also become a more important factor for investors. Focusing on this in the early phase of the entrepreneurial process might increase the chances of getting funding.…”

“…Focusing on this in the early phase of the entrepreneurial process might increase the chances of getting funding. Furthermore, Cetindamar and Ozkazanc‐Pan () focus on a strong mission drift, which relates to the two moral competencies as well, since normative competence plays an important role in developing a mission based on norms and values that are usually related to creating impact that is not necessarily related to economic impact.…”

Performance of impact investing: A value creation approach

“…Either should the enterprise trade-off between financial and non-financial objectives or should we consider that the social value is a condition to achieving financial goals (Dacin et al, 2010(Dacin et al, , 2011Wilson and Post, 2013). In any case, the risk is to turn into a mission drift in favor of financial sustainability and to the detriment of the social objectives (Cetindamar and Ozkazanc-Pan, 2017). On the scale of the impact investment, this plurality should be considered when measuring the different dimensions of the value created by this specific kind of investment, because the plurality of objectives constitutes one of the explanations of value plurality.…”

Role of Venture Capital in Enterprise Innovation Under Psychological Capital and Heterogeneity of Entrepreneur Capital

“…Related research on enterprise performance and strategic decisions was conducted. Leaders with different education levels and tenure periods would directly affect the innovation activities and performance of enterprises (Cetindamar and Ozkazanc, 2017). The higher the education level of entrepreneurs, the more obvious the improvement of enterprise performance.…”