Green Start-Ups

New companies that lower the environmental damage associated with producing and consuming goods and services or that directly contribute to higher sustainability standards are crucial in the transition to a more environmentally-friendly economy. Green start-ups are, however, confronted with multiple challenges including the triple externality problem. By investing in greener solutions and by adopting more sustainable business practices, founders carry much of the costs and risks associated with the entrepreneurial activity. The social returns to their efforts, however, likely exceed the benefits that founders earn. This is also reflected in the findings on who founds green start-ups, where they locate, how they perform and how they are financed. This review presents key insights from the still small - but growing - stream of research on green start-ups. Given the characteristics of founders and their green start-ups, it also discusses implications for the public support of green start-ups and policy more generally.

Hottenrott, Hanna (2024), Green Start-Ups, in: Research and Innovation Directorate-General (Hrsg.), Science, Research and Innovation Performance of the EU 2024, 2024, Bd. 2024, European Commission, Brussels,