Motivations of ‘green’ business angels revealed in new study

Published by  News archive

On 1st Jun 2022

An electric vehicle charging.
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New research led by the University of East Anglia (UEA) reveals that business angels invest in green/clean tech for a combination of altruistic, hedonistic, and economic reasons - not just because of the environmental impact.


The amount of green/clean tech in the portfolio impacts the motivations to invest in the sector, as well as angels’ previous green/clean tech experience.
The findings also show that business angels’ motives to invest in green/clean tech differ from non-green opportunities.

Entrepreneurs will play a critical role in developing the technological solutions to achieve a successful transition to net carbon zero in order to help combat climate change.
Their ability to develop these innovations into market ready products requires access to finance, with angels playing an important role in financing at the start of the process.
The study, conducted with University of Glasgow and published today in the journal Transactions on Engineering Management, is the first to focus on business angels as ‘green’ sources of finance. Previous research has focussed on institutional investors.

Lead author Dr Tiago Botelho, of UEA’s Norwich Business School, said: “This research shows that whether business angels invest in green/clean tech ‘with their hearts or their wallets’ is a false dichotomy. It is a bit of both.

“It has been suggested that half of the technology required to reach net zero has yet to be invented. Business angels are the principal source of early-stage finance, so for net zero to occur much of the required innovations will be funded by angels.

“It is therefore fundamental to understand why business angels are motivated to invest in this sector. Our findings have implications for policymakers and green entrepreneurs. For entrepreneurs, their investment pitch must go beyond the environmental benefit to attract the interest of angels.”

The study is based on interviews with 65 UK business angels. The sample included both those who have invested in green/clean tech and those who have considered it, and so were familiar with such investment opportunities, but not yet invested in the sector.

Participants answered questions about their views on green/clean tech investments. These focused on ethical and financial considerations, as well as the weight they gave to each of the altruistic, hedonistic, and economic investment motivations.

Those angels who invested solely in green/clean tech gave a higher weighting to economic motivations and lower weightings to altruistic and hedonistic motivations.
Angels with less exposure to green/clean tech in their portfolios gave a higher weighting to altruistic motivations and had lower weightings for economic and hedonistic motivations.

Overall, economic motivations were the most important reason why angels invested, followed by altruistic, with hedonistic motivations being the least important.

Co-author Prof Colin Mason, of the University of Glasgow, said: “Entrepreneurs who have developed innovative products and services that contribute to reducing CO2 emissions need funding to bring them to market. Business angels – who fund the start of the entrepreneurship pipeline – play a critical, but under-appreciated, role in enabling this to happen.”

50 Shades of Green - Angel Investing in Green Businesses’, Tiago Botelho, Colin Mason, and Konstantinos Chalvatzis, is published in Transactions on Engineering Management.

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