Can venture capital coinvestments address cleantech underfunding?

Financing innovative cleaner technologies is essential to deliver the transition toward low-carbon and greener economies. Evidence have consistently supported the view that venture capital financing is not suitable for new cleantech companies. This chapter investigates the relation between the network prominence of venture capital (VC) firms and performance of funds in the cleantech industry. In particular, this research presents an attempt to model the networks of VC firms in cleantech through coinvestments and investigates the influence of the network position of the VC firms on the performance of their funds. We show that in cleantech investing, the best-networked VC firms are not the most successful in terms of fund performance. On the contrary, the “betweenness” measure of network position turns out to be a negative predictor of success in certain specifications. Our results indicate that a higher relative score for betweenness might harm the abilities of the VC fund to successful...