Private Equity in Clean Technology: An Exploratory Study of the Finance-Innovation-Policy Nexus

Authors: Michael Migendt, Florian Schock, Florian A. Taube, Paschen von Flotow & Friedemann Polzin,

Abstract:

The role of technological innovation in mitigating climate change has received growing interest in recent years. However, extant literature has neglected a more holistic view on equity financing and the indirect effects of innovation and financial policy on financing innovation through private equity (PE) and venture capital (VC). In this paper, we emphasize the importance of this understudied aspect through a comparative case study of private equity and venture capital for clean technologies in the United States and Germany. We find that systemic interdependencies between institutional investors, PE/ VC and policy makers influence the conditions for innovation - the “finance-innovation-policy nexus”. Adverse effects of policies affecting financial markets, in particular institutional investors, have to be taken into account to effectively mobilize private investments for (cleantech) innovation.

 
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