Previous studies show that firms, in general, die young, and that they are in dire needs for capital
injections. However, for various reasons, startups are sometime not able to gain financing, and
in certain cases one prefer a certain type of capital, which has led to the pecking-order theory,
which assumes that internal capital is preferred over external, and debt is issued rather than
equity. Furthermore, business angels and venture capitalists have very stringent criteria for
investing in a startup, making the conditions very harsh. To remedy this problem, this study
aims to see if startups can utilize Corporate Social Responsibility efforts to enhance their odds
of gaining capital from business angels and venture capitalists, since it during the last decades
has become increasingly popular to integrate in the businesses. Thus, we intend to see if
Corporate Social Responsibility can be a new investment criterion that previous studies have
not expressed.
We identified a research gap in the literature, that investments can be made on other premises
than economical, making us wonder whether or not this can be exploited through CSRactivities.
This led us to the research questions of this qualitative study:
How does CSR-activities within a startup affect the business angel or venture capitalist’s
willingness to invest in the firm?
To fulfill the purposes of this study, we concluded it would be best to conduct a mono-method
qualitative study, wherein we intended to answer the question using data from semi-structured
interviews. We gained invaluable information through eight semi-structured interviews, which
were thematically analyzed into three global themes; investment criteria, networking and
communication, and sustainable undertakings. From the themes we identified different
characteristics which are important for both the startup and entrepreneur, as well as found
evidence that ethical and environmental efforts of startups indeed increase the willingness of
business angels and venture capitalists to invest, especially in economically strong
organizations. However, the investors did not try to make the business model more sustainable
post investment. These findings are very exciting, as they disclose Swedish investors to be
following a triple bottom line approach when investing, meaning that the findings of Carol
(1991, p. 42) and other researchers can be adopted when studying Swedish investment
decisions. This cements social entrepreneurship as a strong contender to the classic notions of
entrepreneurship.