When Do Donors and Investors Unite? Entrepreneurial Ecosystems and the Financing of Hybrid Ventures

Abstract

A central tenet of hybrid ventures is that their dual focus on social and commercial missions can enable them to attract funding from philanthropic and equity financing sources simultaneously. Yet, many hybrid ventures face conflicting institutional demands that can make it difficult to do so. Leveraging recent theorizing on entrepreneurial ecosystems, this study investigates conditions when alternate sources of entrepreneurial finance for hybrid ventures may complement each other. We propose that spatial (e.g., accelerators) and digital (e.g., social media) affordances act as signaling platforms in modern entrepreneurial ecosystems that moderate resource mobilization in hybrid ventures such that they can enhance the complementarity between philanthropic and equity financing of hybrid ventures. Furthermore, we suggest that the higher order, cultural affordances (relational norms) will govern the signaling strength of these lower-order entrepreneurial ecosystem affordances. Empirical results from a simultaneous equation model of a global sample of 6576 social ventures from 38 countries support the proposed framework. By applying a novel empirical approach on a multi-level entrepreneurial ecosystems’ framework, we direct attention to how hybrid ventures leverage signals between financing sources to increase funding outcomes.