skip to content

Keynes Fund


Summary of Project Plan

Startup valuations – particularly of so-called unicorn companies valued at over $1 billion – have been skyrocketing for years, to a point where some commentators have been calling the development a ‘unicorn bubble’ or a ‘Dotcom 2.0 bubble’.

Much of the ecosystem has been driven by scaling digital businesses fast without considering unintended societal or environmental consequences. Economists would describe this is as a market inefficiency of ‘mispricing’ at best and market failure at worst. Now, over the last year, the venture capital and startup ecosystem has started to show increased interest in ESG (environmental, social, governance) principles slowly implicating a shift in the incentive system. Often driven by European state players, at least partly based on more general responsible investing or green agendas, VC investors are starting to ‘price in’ certain environmental, societal and governance risk factors. How does this change in incentives (for GPs but also startups) influence the (price) inefficiency and overall investment behavior and decision making? In other words, is ESG bringing about not only narrative-change but does it also have an impact on the price-making and valuation in the startup and VC ecosystem, possibly with deflationary effects?

In this project, focused directly on questions of market failure, mispricing and incentive systems at the core of the Keynes Fund’s goals, the project team will collect primary empirical fieldwork and interview data with VCs to address the above questions; based on unique access to the ecosystem due to fieldwork engagement with VCs since 2017 (in Silicon Valley, New York, London and Berlin), we aim at interviewing >25 VCs specifically on the topic of ESG and valuations in the first phase of the project. The goal of the project is twofold: firstly, to follow an invitation to submit a paper on the topic to the Cambridge Journal of Economics to further the academic understanding of the impact of ESG; secondly, to gather a small group of VCs for a weekend workshop in Cambridge at the end of the project to discuss and further inform their understanding of ESG and valuations based on our findings.



Dr. Johannes Lenhard


Dr. Johannes Lenhard is Research Associate and Co-ordinator, Max Planck - Cambridge Centre for Ethics, Economy and Social Change. His postdoctoral project turns to international venture capital investors and investigate the values and ethics behind their efforts of making a better future.


Share this Project