Start-up sustainability: An insurmountable cost or a life-giving investment?

An outstanding question in the entrepreneurship literature reigns, given recent emphases on sustainable business practices and corporate social responsibility. If small start-ups are generally stretched for time and resources, does it enhance their chances for survival and success to be sustainable and socially responsible? New firms can aid in rectifying pressing environmental and social issues by being more sustainable. While many entrepreneurs like a sustainable business model and/or mission, investment may not follow so willingly. This paper examines a sample of 300 start-ups across thirty cities around the world to consider whether sustainability is rewarded by investors. Investors signal confidence in start-ups when they infuse life extending investments into them. This analysis also considers whether a more sustainable national context affects investor confidence and whether a sustainable firm within a sustainable national context gains more investor attention and investment. Results show that investors avoid sustainable firms, particularly those that are environmentally sustainable. Moreover, investors enjoy national contexts that are socially responsible, but pay no attention to those that are environmentally conscious. In addition, firms that are sustainable in a sustainable national context are not better off for attracting investment. Insights for policy are that mainstream investors are attracted by national social policies, but these investors are unlikely to be the main force behind sustainable venture growth under today's conditions.