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CSR as a tool for startups to gain external financing: A qualitative study in a Swedish context
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

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


Place, publisher, year, edition, pages
2016. , 83 p.
Keyword [en]
CSR, sustainability, investment criteria
National Category
Business Administration
URN: urn:nbn:se:umu:diva-127057OAI: diva2:1040476
Educational program
Master's program in Business Development and Internationalisation
Available from: 2016-10-31 Created: 2016-10-27 Last updated: 2016-10-31Bibliographically approved

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