How Do Philanthropic Venture Capitalists Choose Their Portfolio Companies?

Motives, Supporting Activities, and Selection Criteria of Social Impact Incubators: An Experimental Conjoint Study

“…Second, our results contribute to the previous literature on the selection criteria of SE supporters (e.g., Lee et al, 2020;Miller & Wesley, 2010;Yang et al, 2020). Our finding that the authenticity of the founding team is the top criterion, which suggests that SIIs use an entrepreneur-focused selection process, which is consistent with the findings of Scarlata and Alemany (2009). However, the professional background of the founding team seems to be of comparatively low relevance for SIIs.…”

“…Previous literature has explored the selection processes of different organizations supporting SEs (e.g., Achleitner et al, 2014;Miller & Wesley, 2010;Scarlata & Alemany, 2009). In particular, the selection processes of impact investors, such as social venture capitalists and venture philanthropic organizations, have been investigated in depth (e.g., Achleitner et al, 2011;Block et al, 2021;Serrano-Cinca & Gutiérrez-Nieto, 2013;Spiess-Knafl & Aschari-Lincoln, 2015).…”

Understanding mechanisms in the social investment market: what are venture philanthropy funds financing and how?

“…Within this body of research, Achleitner et al (2013) analyze how venture philanthropy funds assess the integrity of social enterprises, whereas Botetzagias and Koutiva (2014) analyze the role of legitimacy in determining financing for environmental nongovernmental organizations (NGOs). In addition, analyzing the criteria that venture philanthropy funds apply, Scarlata and Alemany (2009) find that the selection decision for venture philanthropy funds is similar to that of traditional venture capitalists, particularly in terms of the importance placed on entrepreneur and management skills. Further, Geobey, Westley, and Weber (2012) propose the use of portfolio strategies for social investors, whereas Grabenwarter and Liechtenstein (2011) suggest that social investors approach the social investment decision by using an adapted quantitative model.…”

VC investors’ venture screening: the role of the decision maker’s education and experience

“…Hence, VC decision makers with own entrepreneurial experience have been argued to evaluate startups differently than VC decision makers without this specific experience (Zarutskie 2010). Also, prior research shows that entrepreneurial experience affects the ability to identify promising startups (Walske and Zacharakis 2009;Zarutskie 2010) and to detect opportunistic behavior (Scarlata and Alemany 2009;Walske and Zacharakis 2009). In summary, while education provides the knowledge base as well as analytical and problem-solving skills, task-specific experience enables decision makers to focus on key dimensions and ignore less important variables (Shepherd et al 2003;Watson et al 2003).…”