Characterizing impact investing in relation to alternative investing strategies
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Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
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Author
Date
2023
Department
Major/Subject
Mcode
Degree programme
Entrepreneurship and Innovation Management
Language
en
Pages
101
Series
Abstract
Impact investing is a strategy often fostered by early-stage investors, such as business angels and venture capital investors. In fact, early-stage investors are a vital source of funding for most start-up companies, which foster development of innovations, and hence enable profitable economic growth of our nations and civilizations. In fact, impact investing is an investing strategy, where these investors have a so-called dual aim. Hence, their objective is to gain dual returns, i.e., to generate positive social and/or environmental impact, in addition to the more traditional mere financial returns, through their investments. Based on an extensive literature review this thesis draws on a conclusion that impact investing is still broadly considered a nascent and developing investing strategy and research field. Consequently, it is identifiable that there still exists an evident research gap in clearly identifying where the boundaries of impact investing lie in relation to other alternative investing strategies. Consequently, this research builds upon finding an answer to the following crucial research question: What characteristics identify an impact investor when compared to non-impact investors? Accordingly, in this quantitative cross-sectional analysis, secondary data is acquired from the established Finnish Business Angel Network (FiBAN) to test specific hypotheses to answer this question. Ultimately, a sample of 275 early-stage investors will be analyzed using binary logistic regression as the main method, to gain insights about the characteristics of 41 (14.9 %) impact investors’ and 234 (85.1 %) alternative, non-impact, investors’ investment strategies. Based on this research it is evident that the investor characteristic of ‘full-time investing’, in addition to ‘gender’, are significant identifying characteristics of impact investors when comparing to non-impact investors. Contrarily, characteristics ‘portfolio size’, ‘investment size’, or ‘frequency of investments’, in addition to ‘education’, are not found to being significant characteristics, in this research. Ultimately, full-time investors are found to being 2.555 times more likely, and female investors 2.858 times more likely, identified as impact investors, when compared to non-impact investors. The finding that full-time investors are more likely characterized as impact investors than non-impact investors is a novel finding in relation to current research. Similarly, the finding that female investors are more likely characterized as impact investors is a significant finding in the context of impact investing. However, the fact that women are more socially and environmentally conscious has previously been identified in the context of other responsible investing strategies.Description
Thesis advisor
Kroeger, ArneKeywords
impact investing, traditional early-stage investing, start-up investing, business angel, venture capital
