Abstract
In this project we will study whether the emission reduction potential (ERP) of climatech start-ups affects investors' behaviour and financial decisions. Recently, reliable and fine grained ERP measures having been created by third parties that allow to have an estimation of the amount of carbon emissions that a particular start-up may be able to reduce (as compared to the state of the art). The climatech sector has received much attention and funds, but no evidence exist to date about whether ERP affects start-ups financial success in funding stages or latter outcomes (e.g., IPO). The project as a whole involves a regression analysis using Pitchbook data (a database tracking startups and investors), and two field experiments. In this pre-registration we are preregistering the second experiment.
The setting of our field experiment is a set of 21 early-stage climatech start-ups that will be evaluated by 25 angel investors (that are part of an angel investor network in South East Asia). The outcomes of interest (our dependent variables) are the evaluation score and the investment interest as expressed by the 25 angel investors. Our randomization of start-ups will be done "within investors", meaning that for each investor we will randomly select start-ups to be in the control or one of two treatment conditions. The randomization will be performed on the standardized template that evaluators will receive that describe the startups. This template as the usual information that early stage investor evaluate, such as description of the founding team, description of the idea, assessment of potential market, etc. One section of this template will have information on ERP, describing what ERP is, and the source of the ERP information we use. We will experimentally manipulate the ERP information in this section. The control group will indicate that the ERP information is "not available for this start-up". The first treatment condition will indicate that "This start-up is below the median ERP across all the start-ups evaluated in this program". The second treatment will indicate that "This start-up is above the median ERP across all the start-ups evaluated in this program". The comparison of the two treatment and the control will indicate whether the presence of ERP information affects investors' evaluation and selection. The comparison between the two treatments will indicate whether the level of reductions in emissions affects investors' evaluation and selection.