Assessing mission drift at venture capital impact investors

Official URL: http://dx.doi.org/10.1111/beer.12149

In this paper, we consider a recent trend whereby private equity available from venture capital (VC) firms is being deployed towards mission-driven initiatives in the form of impact investing. Acting as hybrid organizations, these impact investors aim to achieve financial results while also targeting companies and funds to achieve social impact. However, there exists the possibility of mission drift in these VCs that might become detrimental to the simultaneous financial and social goals of such firms. Based on a content analysis of mission statements, we assess mission drift and the hybridization level of VC impact investors by examining their missions (ends/goals) and their investment practices (means) through the criteria of social and financial logic. After examining eight impact-oriented VC investors and their investments in 164 companies, we find mission drift manifest as a disparity between the means and ends in half of the VC impact investors in our sample. We discuss these findings and make suggestions for further studies.