Venture Capital and Vulnerability: Navigating Natural Disasters and Investment Resilience

This study examines the impact of natural disasters on venture capital (VC) investment decisions. Using 47 catastrophic natural disasters occurred in the United States from 1990 to 2019, our empirical analysis reveals a significant reduction in VC investments in disaster zones. Additionally, natural...

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Bibliographic Details
Published in:European financial management : the journal of the European Financial Management Association 2024-11
Main Authors: Huang, Chen, Zhang, Aoran, Zhang, Mengyu, Zhao, Yunfei
Format: Article
Language:English
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Summary:This study examines the impact of natural disasters on venture capital (VC) investment decisions. Using 47 catastrophic natural disasters occurred in the United States from 1990 to 2019, our empirical analysis reveals a significant reduction in VC investments in disaster zones. Additionally, natural disasters negatively influence VC exit strategies, reducing the likelihood and extending the time to successful exits via IPOs. However, we find that green VCs are more likely to invest in disaster‐affected areas, indicating potential resilience through green technological innovation. Our findings emphasize sustainability and disaster mitigation, and offer valuable insights for policymakers and investors amidst rising climate uncertainties.
ISSN:1354-7798
1468-036X
DOI:10.1111/eufm.12528