Entrepreneurs are ready to refuse funding from non-sustainable investors

Entrepreneurs across five of the world’s biggest investment hubs have said they are ready to turn down funding from investors without adequate sustainability practices, new research shows.

The dual poll of entrepreneurs and investors from the US, UK, Saudi Arabia, China, and France reveals that more than two thirds say an investor’s sustainability practices are a key factor in decision making – with those in China and Saudi most conscientious.

The research, commissioned by Monsha’at, Saudi Arabia’s General Authority for Small and Medium-Sized Enterprises, has been released as thousands of entrepreneurs, investors and policymakers gather at the Global Entrepreneurship Congress (GEC) in Riyadh, co-hosted by Monsha’at and the Global Entrepreneurship Network.

Researchers questioned a weighted sample of more than 1,000 entrepreneurs and investors across the key markets, asking them critical questions about what they now look for when taking decisions about their business.

Entrepreneurs in all five markets were asked whether they agreed with a series of statements including “I would refuse an investment if the investor had no sustainable practices”, with a total of 56% saying they either strongly or slightly agreed with the statement.

Entrepreneurs in Saudi Arabia (84%) and China (73%) were most likely to say they would refuse funding from a non-sustainable investor, followed by France (51%). Only around a third of entrepreneurs in the US (36%) and UK (35%) said they would turn down the money. Interestingly, women were also more likely to take a principled stand with 60% saying they would not take the investment, compared to 53% of men.

On the financing side, investors from Saudi (84%) and US (79%) were most likely to try and put money into companies with “good sustainability strategies”, followed by those from France (69%), the UK (67%), and China (61%). Investors across all markets agreed with the statement “new ideas from entrepreneurs will be key to hit zero emissions targets”. Again, women investors (79%) were more likely to favour firms that have good sustainability strategies, than men (67%).

Entrepreneurs were also asked how important a series of different attributes are when assessing investors, with two thirds across all markets, 68%, citing sustainability practices as a key concern, with “realistic growth expectations” and the investor being a “trusted advisor” cited equally as the most important attributes.

Some 49% of investors also agreed with the statement “I am more cautious with my investments since the pandemic”, but 81% were either “very optimistic” or “somewhat optimistic” about the outlook for their domestic market over the next one to two years.