Paper short abstract:

Venture Capitalists invest in technology startups and shape our economic future. Only recently have they started to embrace impact investing and ESG integration. In this paper we focus on European health tech VCs' impact and American VCs' diversity narratives and ask: are the ethics really changing?

Paper long abstract:

Venture Capital Investors (VCs) invest money from asset owners - state funds, pension funds, endowments and foundations - into young (technology) companies. The VC industry has not only seen a drastic influx of capital over the last ten years due to the macro-economic circumstances of a low interest rate environment, it has also filtered and financed among others 8 of the biggest 10 companies, from Appel and Microsoft to Facebook and Google. The future-making power of VCs is indisputable - and has so far mostly been focused on a single, profit bottom line.

Lagging behind compared to public market and later-stage buyout investors, VCs have only recently started to embrace both impact investing and ESG (environment, social, governance) integration into their investment considerations. Pushed further by the impact of Covid-19 and ever-increasing climate disasters, more money has gone into healthcare VC as well as ESG integration efforts. Based on (mostly digital) ethnography and several hundred interviews with (European and American) impact- and ESG-focused VCs, we compare the moralised narratives VCs have been embracing with changes in action and practice. We use two case studies (drawing on observations around diversity, equity and inclusion (DEI) integration in the US and health tech investors in the UK and Europe) to illuminate ethical change - and scrutinise the often diverging narrative/practice nexus.