Biodiversity entrepreneurship

Centre for Endowment Asset Management (CEAM)
Centre for Endowment Asset Management (CEAM)

Overview

Biodiversity loss is a rapidly escalating global risk but it also represents an emerging frontier for innovation. The project ‘Biodiversity Entrepreneurship’, examines how entrepreneurial ecosystems create, attract and shape ventures that generate biodiversity-related solutions. It provides the first empirical evidence on where biodiversity entrepreneurs emerge, how they cluster and why certain regions support more effective biodiversity-focused innovation than others. By addressing these critical factors, the paper emphasises the importance of biodiversity entrepreneurship in promoting long-term environmental sustainability and creating impactful ecological and societal solutions.

An interview with Sean Cao.

Authors

Sean Cao

Robert H. Smith School of Business, University of Maryland

Andrew Karolyi

Cornell SC Johnson School of Business, Cornell University

William W Xiong

School of Management, Binghampton University, SUNY

Hui Xu

Lancaster University Management School

Project aims

The project seeks to answer a foundational question: why do some places generate more impactful biodiversity entrepreneurs than others? Using the EFP framework, developed to identify scalable, comparative foundations for entrepreneurship, the study is organised around 4 core objectives:

1

Identify biodiversity startups

The project aims to construct a comprehensive dataset of biodiversity-focused start-ups by leveraging Crunchbase and PitchBook databases. This involves categorising ventures and refining identification methods using large language models (LLMs) for precision classification.

2

Analyse financing dynamics

Investigate the fundraising patterns of biodiversity start-ups compared to generic ventures, including the role of diverse investors such as venture capitalists and mission-driven impact funds.

3

Explore social media influence

Study how biodiversity start-ups utilise platforms like Twitter to connect with investors and build strategic communication channels.

4

Address funding challenges:

Highlight disparities in capital raised by biodiversity ventures compared to climate-focused initiatives and propose strategies to bridge the biodiversity financing gap.

Key insights

1

Taxonomy of biodiversity startups

The project pioneers a classification system for biodiversity start-ups based on ecological focus areas, such as marine, forest, agricultural and animal biodiversity. Multi-functional biodiversity ventures emerged as the largest category, accounting for 26.5% of ventures and 43% of total funding.

2

Funding disparities

Biodiversity start-ups receive significantly less financing compared to climate-focused ventures, with total deal sizes and average funding amounts being roughly half of those for generic start-ups.

3

Impact of social media on financing

Active social media engagement, particularly on platforms like Twitter, improves fundraising outcomes for biodiversity ventures. Higher levels of Twitter activity were correlated with better financing terms.

4

Role of values-driven investors

The research highlights the importance of values investors, such as impact funds and public capital sources, in bridging the financing gap and aligning investments with ecological and sustainability goals.

5

Emerging policy momentum

A surge in biodiversity entrepreneurship post-2017 was linked to global policy initiatives like the Kunming-Montreal Global Biodiversity Framework, driving increased venture launches and fundraising activity.

Why this matters for investors

Identifying untapped opportunities

Biodiversity start-ups represent an emerging sector with significant potential for ecological and societal impact. Investors can leverage this research to identify promising ventures in areas like marine, forest, and agricultural biodiversity that align with sustainability goals.

Ecosystem quality is a predictor of venture performance

Investors can use the study’s insights to evaluate startup risk by examining the founding ecosystem’s strength, not just the firm’s characteristics. Strong ecosystems correlate with higher-quality, more resilient ventures.

Leveraging social media for strategic engagement

The study reveals how biodiversity ventures utilise platforms like Twitter to connect with investors. Investors can use this knowledge to enhance their engagement strategies and identify active start-ups that are likely to succeed in fundraising.

A tool for geographic and portfolio diversification

Because ecosystems play such a strong role in shaping venture success, investors can diversify biodiversity-themed portfolios by targeting regions with proven entrepreneurial foundations. This reduces exposure to regulatory, scientific, and scaling risks.

Evidence for policymakers and asset owners

The findings show that targeted ecosystem strengthening can catalyse biodiversity innovation, creating favourable conditions for investment and industrial development.

Conclusion

This research highlights the transformative potential of biodiversity entrepreneurship in addressing ecological challenges. It identifies a taxonomy of biodiversity start-ups, emphasises their financing gap compared to generic ventures, and underscores the critical role of public and impact investors in bridging this gap. Social media emerges as a key driver of visibility and funding success. The post-2017 surge in biodiversity ventures reflects global policy momentum. These findings advocate targeted investment and policy support to unlock the sector’s potential for sustainable impact.

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