THE EFFECT OF UNCERTAINTY ON VENTURE CAPITALISTS’ INVESTMENT TRAJECTORIES IN THE CLEAN ENERGY SECTOR

This study investigates the effects of exogenous and endogenous uncertainty on venture capital (VC) firms� strategies when investing in an emerging sector. Using the real options logic, we theorize that greater levels of exogenous uncertainty increase VC firms� propensity to spread their investments across multiple new technologies, and that such effects are mitigated by the level of endogenous uncertainty they experience. Our empirical investigation of the strategies of 172 U.S. VC firms that invested in the emerging clean energy sector during the period 1990-2008 provides some support for these arguments. Our study contributes to entrepreneurship theory and practice by examining the interplay between exogenous and endogenous uncertainty in influencing VC investment strategies in emerging sectors.