Investment attraction in deep tech startups: the effect of sustainability

Abstract

Objective: This study aims to understand the resources that explain the attraction of investment in deep tech startups and investigate the role of sustainability as a factor in investment attraction. Methodology/Approach: Using primary data, logistic regression analysis was applied to a sample of 220 deep tech startups located in the state of São Paulo, Brazil. Originality/Relevance: The involvement of deep tech startups is crucial in addressing sustainability challenges, yet the extent to which this factor explains investment in startups remains uncertain. Drawing on the Resource-Based View (RBV), this research contributes to the literature by elucidating the resources that drive investments from different stakeholder groups, including partners, government, and third-party investors in deep tech startups. Main Findings: Third-party private investors are attracted to startups that possess unique resources in the market. The investment by partners is driven by proprietary technology, while government investment is influenced by the superior performance of the startup. However, no association between sustainability and investment attraction was observed. Theoretical/Methodological Contributions: This study provides insights into the literature on investments and resources by specifically examining how different resources guide investment decisions. Furthermore, it makes a critical contribution by highlighting the absence of a relationship between investments and sustainability. Social/Managerial Contributions: For entrepreneurs of deep tech startups, this study underscores the importance of valuing and emphasizing different resources based on the intended type of investment, whether from partners, third-party investors, or the government. For investors in deep tech startups, it emphasizes the significance of actively directing investments toward businesses that aim to address socio-environmental issues.