Entrepreneurs’ Social Capital in Overcoming Business Challenges: Case Studies of Seven Greentech, Climate Tech and Agritech Startups

Abstract

Environmental entrepreneurship has a vital role in addressing our planet’s critical environmental state by implementing innovative solutions to combat escalating environmental threats. These ventures, however, face numerous challenges, including securing initial funding, navigating technical difficulties, and gaining market acceptance, which are magnified by the pioneering nature of green innovations. Social capital is a key facilitator, enabling entrepreneurs to overcome obstacles through smart network management, trust, and strategic partnerships. This study investigates the role of social capital in mitigating the challenges faced by environmental entrepreneurs. We conducted semi-structured interviews with entrepreneurs. Our findings reveal how social capital not only assists in navigating the complexities and challenges ingrained in environmental entrepreneurship but is also an inherent part of environmental venture creation. These insights emphasize the importance of social capital in advancing environmental innovation. Theoretical and practical implications are discussed.

1. Introduction

The future of humanity today may be equated with the Titanic leaving the harbor on its maiden voyage. Our captains (world leaders) were informed (by environmental scientists) that icebergs are likely to appear in our path, and most countries made only minimal changes [1]. While most developed countries have already adopted some environmental policies, they are still responsible for very high CO₂ emissions, while chemical manufacturing worldwide has been increasing and is expected to double in the next few years [2,3]. Over 9 million people die each year due to pollution and pollution-related health problems [1]. The pollution caused by various industries can be reduced by improving existing technologies and processes or replacing them with sustainable ones [4,5]. Environmental entrepreneurship reduces pollution by developing, manufacturing, and increasing access to new sustainable technologies [6].

In their essence, environmental ventures carry a dual purpose; they are both business ventures that aspire to be profitable and organizations that aspire to increase sustainability and solve environmental issues [6]. This duality adds some unique difficulties beyond the challenges faced by new or even innovative ventures in general. The challenges environmental ventures face vary widely depending on the operating sector, the nature of innovation, and the geographic location of the venture [7]. Securing initial funding is challenging for many startups and even more so for environmental startups [8]. This may be because, among other reasons, environmental and sustainable ventures are innovative by nature [9]. The initial costs of research, development, and scaling of innovative technologies tend to be high and come with high risks and challenges [10,11]. Investors often hesitate to invest in such low-certainty, high-risk ventures [12].

Once initial capital is secured, environmental ventures may need more expertise and face difficulties in reaching information, low bargaining power with suppliers, and high costs of certification or implementation of the tool [10]. Furthermore, once sustainable solutions are ready to be marketed, they compete with non-environmental solutions by well-established companies and often face a lack of public awareness and state and regulatory support for sustainability [13,14].

Social capital is a catalyst for entrepreneurship [15,16]. Social capital refers to the networks of relationships among people who live or work in a particular group, enabling effective functioning. It includes the collective value of all social networks and tendencies to do things for each other, such as norms of reciprocity [17]. When analyzed in the context of entrepreneurial ventures, social capital is often conceptualized as encompassing three distinct constructs: structural (roles and institutions that create and sustain interpersonal networks), cognitive (shared norms, codes, and values that allow interpersonal cooperation), and relational social capital (the advantages that come from having interpersonal relationships) [18]. Another view of social capital refers to bonding social capital versus bridging social capital. Bonding social capital is the strong ties within groups, while bridging social capital refers to weaker ties that occur when a relationship is formed between groups [19]. Such a view may refer to social capital as internal or external to the venture. Internal social capital can be measured by a non-financial method (high, medium, and low levels) and a financial manner. Both measures were tested within enterprises [20]. Both of these forms are critical components of a startup associated with increased entrepreneurial success [16]. Crowley and Barlow identified four main aspects of social capital: trust (both in people and institutions), formal social capital (formed via formal group memberships), informal social capital (such as friends and family), and tolerance of others (especially those who differ from you) [21].

The current research focuses on the examination of relational social capital and specifically bridging social capital, which is external but could be either formal or informal. Social capital is associated with more thorough work in the early entrepreneurship stages [22]. Some studies also found that in small ventures, social capital is associated with new product development capabilities [23]. Social capital provides entrepreneurs access to knowledge and information like market insights, trends, and ideas they may not be able to reach in formal ways [24]. Those qualities can advance smoother transactions, reduce costs, and make it easier to negotiate and conduct business [25]. Social capital can also lead to opportunities for collaboration and strategic partnerships that provide access to new markets, technologies, and expertise [26].

This research explores several key aspects related to the role of relational external social capital in environmental entrepreneurship, focusing on how environmental entrepreneurs acquire and leverage social capital to overcome the unique challenges they face. It examines the role that external social capital plays in promoting environmental entrepreneurship and how these entrepreneurs utilize their social networks to access resources and opportunities beyond their immediate organizational boundaries and even integrate external social capital into the venture. By investigating these aspects, the study aims to enhance the understanding of how social capital contributes to the success and sustainability of environmental ventures.

We present seven case studies from different fields within the environmental entrepreneurship sphere. This paper contributes to the current body of literature by tracing the challenges that environmental initiatives face as perceived by their founders and CEOs and presenting how they use their social network and social capital to overcome these unique challenges.

The remainder of this paper is structured as follows. We first examine the current knowledge regarding environmental entrepreneurship, its unique challenges, and how social capital may promote it. We then present the current research, followed by a description of the methodology, data collection, and analysis. The results are then presented and finally discussed in the discussion section. In our discussion, we also stress some implications for both academics and practitioners, introduce the limitations of this research, and propose ideas for future research.

2. Literature Review

2.1. Challenges and Opportunities for Environmental Entrepreneurship

Today, our planet faces a range of environmental crises, with climate change and environmental pollution standing out as two of the most critical challenges [1]. Climate change refers to the long-term change in the average temperature and typical weather patterns. According to reports by the Intergovernmental Panel on Climate Change (IPCC), every additional 0.5 °C of global warming will contribute to higher risk globally [27]. This risk includes increased socio-ecological degradation, greater incidence of extreme weather events, and heightened challenges to food and water security. The anthropogenic (man-made) effect is responsible for almost two-thirds of the change in atmospheric and ocean temperature [28]. Sadly, while high-income communities enjoy more of the fruits of industrialization, the risks do not disproportionately affect low-income communities that do not have the resources to mitigate them [27].

Pollution is closely tied to climate change but also carries its own set of damages to humanity and nature alike. More than 6.5 million people die each year as a result of air pollution-related issues, while chemical-related deaths stand at 1.8 million annually [1]. Modern pollution is a global threat to ecosystems as it disrupts the environment’s ecological balance, also harming the health of people who consume the polluted water, air, and food [29]. One study presented 467 ways in which air pollution and climate hazards negatively affect humanity and the entire ecosystem of our planet [30]. Industrialization associated with fossil fuel combustion, as well as rampant urbanization, population growth, and the lack of adequate environmental regulation, all contribute to the ever-rising death toll of modern pollution [1].

In recent years, environmental issues have acquired worldwide recognition as a global emergency that adversely affects humanity and the entire world’s ecosystem. Changes in weather patterns and extreme weather events are becoming more frequent and extreme [31]. The dangers of pollution and climate change are discussed and depicted in books, movies, and mass media [32,33,34,35]. As awareness increases, there has been an increase in environmental laws, with over 1200 environmental policies established between 1997 and 2017 across 164 countries [36]. China, the EU, Japan, India, and the USA have implemented effective policies for renewable energy, passenger vehicles, and forestry, while other sectors are lagging [37].

As sustainability gains the support of regulation and public opinion, businesses need to spearhead the shift toward sustainability by adopting innovative business models and eco-friendly production methods [38]. While environmental policy greatly influences the funding of green startups, it plays a lesser role in entrepreneurs’ initial decision to venture into the green sector [39]. It seems that often entrepreneurs do not set out with the intention to seek environmental entrepreneurship; instead, they see opportunities for much-needed innovative entrepreneurship and see them [40]. The success of environmental ventures not only benefits the business itself but also leads to tangible improvements in environmental health [6]. These achievements can include reductions in pollution, conservation of resources, enhancement of biodiversity, and contributions to the fight against climate change [41].

Environmental ventures face the challenges that other ventures face as well as additional challenges that stem from their dual purpose. While most ventures aspire mainly to achieve financial success, environmental ventures aim for both financial success and increased environmental sustainability [6]. Securing initial funding is often a challenge for new ventures; it is increasingly hard for environmental ventures [8]. Environmental ventures tend to have high initial costs due to the need for research, development, and scaling of innovative technologies; these processes also come with high risks and challenges [10]. However, understandably, investors tend to prefer high-certainty, low-risk ventures [12]. Therefore, environmental ventures often struggle and encounter difficulties in acquiring sufficient financial capital [8].

Due to the innovative and often pioneering nature of environmental ventures, which may not yet be widely understood or accepted in the market, they also struggle to achieve recognition of their credibility as an organization [42]. Achieving the regulatory seal of approval could go a long way to segment the venture’s credibility and secure much-needed financial support [8]. However, environmental regulations may entail complex legal or technical requirements that may be unrealistic [10]. Furthermore, these regulations differ across countries and are unstable as they change over time [8].

Once an environmental solution is developed, environmental ventures face challenges associated with supply chains. When external partners are not meeting their obligations, operations are often disrupted [43]. This is a challenge for environmental ventures because they often rely on specific, sustainable materials or technologies that may not be widely available, limiting the pool of potential partners [44]. Furthermore, the innovative and pioneering nature of environmental ventures means they may be working with new or evolving technologies where the supply chain is not yet mature [42]. This can lead to inconsistencies in the quality and availability of materials or components, making it more challenging to establish stable, reliable supplier relationships [45].

Once the product is ready to be marketed, environmental ventures may also face additional challenges because they address relatively new and complex environmental problems necessitating a higher degree of innovation in their approaches and technologies [46]. People and businesses tend to resist innovation [47]. Resistance to innovative products stems from upfront costs, incompatibility issues, performance risk, and personal beliefs [48]. This can slow the adoption of innovative solutions, impacting their market penetration and overall success [49].

Finally, innovative environmental ventures often also face the difficulty of not having benchmarks. A benchmark is a standard or reference point for comparison [50]. Environmental ventures in new fields often lack benchmarks because these areas are pioneering and have no historical data or precedents to measure against [51]. Since these ventures offer new solutions for emerging environmental challenges, traditional benchmarks may not exist or be applicable. Therefore, creating new metrics to evaluate success impacts these companies by necessitating additional resources to define success and assess progress, potentially complicating efforts to attract investment and demonstrate success [52].

2.2. Social Capital as a Catalyst for Environmental Entrepreneurship

One of the earliest definitions and analyses of social capital was written by Pierre Bourdieu in his 1986 article “The Forms of Capital”. He defined social capital in terms of durable networks and relationships and the resources available through those relationships. Bourdieu view emphasizes the importance of group membership and leveraging it for individual gain within a venture [53]. Following was Coleman, who further developed the concept of social capital. He highlighted the functionality of social capital as a resource and the role of structure that allows for information sharing and support within ventures. Coleman believed that trust, reputation, and norms are critical for venture success [54]. Later on, Putnam described social capital as a composition of three components: moral obligations and norms, social values (especially trust), and social networks (especially voluntary associations) [19]. More recently, social capital was defined as the collective resources that include shared norms, values, beliefs, trust, networks, social relations, and institutions. It enables cooperation and collective action to reach mutual benefits [55].

Social capital can be categorized into various constructs within the context of entrepreneurial ventures. A widely recognized framework divides social capital into three distinct constructs: structural social capital refers to roles and institutions that establish and maintain interpersonal networks; cognitive social capital refers to shared norms, codes, and values that facilitate interpersonal cooperation; and relational social capital refers to the benefits derived from interpersonal relationships [18].

Another view distinguishes between bonding and bridging social capital. Bonding social capital refers to strong ties within groups, while bridging social capital describes weaker ties formed between groups [19]. This distinction is important as it helps to understand the different types of social capital and their implications. This perspective aligns with the notion of internal and external social capital. Internal social capital, associated with Putnam and Coleman approaches, refers to relationships, networks, and resources existing within a particular group or organization. It can be measured both qualitatively (high, medium, and low levels) and financially [20]. External social capital, on the other hand, refers to relationships with actors outside the immediate organization, providing access to resources and opportunities beyond the group’s boundaries [56].

Both internal and external forms of social capital are associated with increased entrepreneurial success [16]. Crowley and Barlow identified four main aspects of social capital: trust (in people and institutions), formal social capital (formed via formal group memberships), informal social capital (such as friends and family), and tolerance of others (especially those who differ from oneself) [21].

Social capital plays a crucial role in promoting innovation and entrepreneurship. It provides a framework of trust and cooperation that facilitates the sharing of information and resources, which are essential for innovation [57]. Social networks within communities or industries can spark new ideas and provide support structures for testing and developing these ideas [58]. Entrepreneurs leverage their social capital to access knowledge, financial resources, and partnerships, enabling them to navigate challenges more effectively and bring innovative solutions to the market. Strong social connections also help in building a supportive ecosystem that encourages entrepreneurship ventures [59].

However, social capital may be a double-edged sword, as social capital may also have a negative or “dark” side. Studies have found a negative (i.e., harmful) association between social capital and health outcomes [60]. Additional negative consequences within an organization (internal social capital) include dilution of the dialectical process, inhibition of individual learning, groupthink, postponement of structural adjustments, non-rational escalation of commitment, and blurring of firm boundaries [61]. Others claim that social capital is contextual and can have both positive and negative effects depending on the situation [62]. Furthermore, as a construct, social capital is criticized for being hard to measure and ambiguous [63].

While the literature extensively covers social capital’s role in the success of agricultural entrepreneurs [16], in the impact of social entrepreneurship [57], and in adopting climate change strategies [64], research specifically addressing its impact on environmental ventures is scarce. Some notable exceptions found that academic support and social capital significantly impact young Saudi graduates’ green entrepreneurial intentions [65]. It was also found that social capital aids environmental entrepreneurs by creating supportive networks that provide access to essential resources, information, and support. These networks, built on trust and shared norms, promote cooperation, mitigate costs and risks linked to innovative green technologies, and hasten the introduction of sustainable solutions [66]. Finally, it was found that social capital improved the outcomes of education for sustainable development among students [67].

Thus far, we have presented some harsh challenges that environmental entrepreneurs face, as well as the importance of social capital in promoting and advancing entrepreneurship. This study aims to advance our understanding of the challenges environmental entrepreneurs face and the ways they utilize their relational, external social capital to overcome these challenges and advance their ventures. In this paper, we examine the perceptions of environmental entrepreneurs regarding the unique challenges they face, as well as the way they depict their acquisition and use of social capital as a means for overcoming those challenges.

This study employs a case study method, which is a specialized subcategory of qualitative research. Qualitative research often does not present predetermined research hypotheses. Instead, it uses an inductive approach, according to which theories and hypotheses are generated from the data, thus allowing the researcher to build their view based on the data “from the ground up” and pursue new issues that may come up during the research process [68]. The goal of this research may be divided into three research questions. First, what challenges do environmental entrepreneurs perceive as unique to their field, distinct from those faced by entrepreneurs in other sectors? Second, how do environmental entrepreneurs believe they can (and do) leverage their social capital to overcome these and other challenges? Third, how do environmental entrepreneurs see the process of acquiring and sustaining the necessary social capital to address challenges and advance their initiatives? This research examines the under-examined yet critical aspect of social capital and the role it plays in promoting environmental entrepreneurship. It contributes to a deeper understanding of the critical role of social capital in the success of environmental innovation.

3. Method

In this paper, we used a qualitative multiple case-study method [69]. The qualitative approach is ideal for situations in which little is known about a phenomenon or it is unquantifiable [70]. We use this approach because we examine phenomena that are hard to quantify: the width and depth of social capital and the ways it is used to promote environmental entrepreneurs. We aimed to understand the context, experience, and perspectives of the entrepreneurs, as discussed by Barrett and Twycross [71]. We wished to understand the motivations, opinions, and experiences of environmental entrepreneurs regarding the use they make of social capital. The case studies method was chosen since it is uniquely apt for exposing complex interactions and allowing for an in-depth examination of processes and situations [72]. Although case studies are context specific and not meant for generalization [73], the findings can offer valuable insights through transferability to similar contexts, benefiting both research and practice. This method was used in previous research to examine similar questions [74,75].

We conducted seven case studies to provide diverse perspectives. Since we set out to examine the effects of social capital throughout the various stages of diverse environmental ventures, our selection criteria required CEOs of environmental ventures who were also among the founders of the venture. This was crucial for the respondents to have a clear view regarding the early stages of the ventures, as well as the current ones. We intentionally sought out ventures of different sizes, stages, and fields (e.g., renewable energy, waste management, sustainable agriculture) to include a range of experiences and perspectives to acquire a more comprehensive understanding of how social capital is utilized across different contexts. All ventures were from the same country so that cultural differences would not affect the ventures differently (thus unfortunately, also limiting generalizability, which is discussed in the discussion section).

Four of the respondents were contacted by one of the authors they were acquainted with (they were interviewed by another they had not previously met). The authors had no prior acquaintance with the remaining three respondents. Potential respondents were selected based on an online search of environmental entrepreneurs. The relevant entrepreneurs were then contacted via their professional social network (LinkedIn) and requested to take part in the research. Following their initial consent, a Zoom meeting was set.

All interviews were conducted within two weeks during January 2024. The interviews were conducted by the same researcher via Zoom. The interviews were recorded and transcribed. The interviews took between 22 and 70 min, with an average interview time of about 50 min. Each interview began with an explanation of the research and receiving informed consent from the interviewee (the research was approved by the IRB). Information about the respondents is presented in

Table 1. List of respondents.

Interviewee	Gender	Age Group	Position	The Company’s Current Round	Funding
EM	Female	50′	CEO	C	~$130 M
JD	Male	30′	CEO	B	~$70 M
UB	Male	30′	CEO	B	~$80 M
FS	Male	40′	CEO	B	~$7 M
ET	Male	60′	CEO	D	~$200 M
NS	Male	50′	CEO	A	~$13 M
CR	Male	50′	CEO	C	~$90 M

Note: The company’s current round refers to the specific stage of fundraising the venture is currently pursuing or has just completed. A refers to the first fundraising round after the Seed. Often, this round is used to scale the business model. B refers to the second fundraising round (after the Seed stage), C refers to the third round, and D to the fourth one.

(names of respondents are represented throughout this paper by alias initials).

The semi-structured interviews allowed us the flexibility to adapt our approach based on what we learned during the research process [76]. This adaptability allows for more comprehensive insights, exploration, and the following of leads that emerge during the interview process [77]. The interviews included open-ended questions that encouraged the interviewees to provide detailed and expansive answers. The interview aimed to resemble a natural, friendly conversation rather than a formal questioning session. Those conditions facilitated honest and comprehensive responses.

The questionnaire used for the semi-structured interview was constructed by synthesizing issues arising from related theoretical frameworks [78,79,80,81,82] (We chose four prominent papers in the field of social capital and one theoretical model focused on social capital in the entrepreneurial context to be used as the theoretical foundation of the questionnaire [78,79,80,81,82]). Each of these papers focused on different aspects of social capital.

We used an AI tool (Chat GPT-4) for the initial construction of the semi-structured questionnaire. Artificial intelligence tools gain more impact on our lives as the years go by [83]. AIs and specifically Chat GPT may be used for integrative analyses of perspectives and formation of novel ideas [84,85,86]. The use of AI tools was, in our perspective, efficient, yet an AI is not accountable for the content it produces [87]. Therefore, each stage of the questionnaire development was reviewed, assessed, and edited by the authors.

To construct the semi-structured questionnaire, the authors uploaded each of the four papers to the AI tool, prompting it to generate open-ended questions regarding each aspect of social capital, depicted in each of the sources. The prompt given to the AI asked to “Provide 4–6 measures/dimensions with 2–3 questions each for an interview with entrepreneurs”. The authors then examined the questions and edited them (also removing ones that were less relevant). This process was repeated for each of the theoretical frameworks. Following this, the authors took the questionnaires that the tool produced and asked the tool to synthesize them into one semi-structured questionnaire. The new questionnaire was then shortened and re-edited by the authors (see Supplementary Materials for the sources for the source of each question). As this is not a fully structured questionnaire, the final questionnaire was designed to allow the interviewer to ask additional clarification and elaboration questions regarding the main questions in the questionnaire, as well as to allow respondents the freedom to express their views on a specific issue.

The authors conducted a systematic thematic analysis as outlined by Braun and Clarke [88]. Initially, the authors familiarized themselves with the interviews transcripts, immersing themselves in the data by reading and re-reading them. The authors then coded interesting content relevant to the research questions (see Supplementary Materials). The first stage of the analysis was conducted individually. However, once the coding was carried out, the authors compared their coding, discussed it, and resolved the discrepancies to refine the coding, After the initial coding was set, the authors sorted the different codes into potential themes. The authors then reviewed the themes in light of the original data and refined their boundaries and names. The results were then written by one of the authors and reviewed by the others in light of the interviews transcripts and their own coding of the data [89].

4. Results

We first describe the formation of the ventures. Following this, we examine the challenges faced by environmental ventures as depicted by their CEOs (Figure 1). We then explore the ways that the environmental entrepreneurs view their use of social capital to assist in overcoming the challenges their ventures face (Figure 2). Finally, we note how the entrepreneurs acquired their social capital and how they view its acquisition process (Figure 3). Interestingly, only two of the seven respondents (CR, ET) stated that their initial motivation was associated with the environmental field. One stated that they wanted to make a positive impact globally, and the other was interested in environmental solutions. CR described his choice of the environmental field as coming from “my desire to make a meaningful impact on the civilian world, on the State of Israel, and for the entire globe”.

While respondent ET did not seem to plan to direct his venture into the environmental realm, he was interested in a technical issue that has some environmental meaning.

“To be honest, it’s just a few twists and turns. Initially, we started looking for various materials that could be used in the worlds of semiconductor conductors, which would be more environmentally friendly and more interesting.”

Five of the seven respondents described their introduction to the field of environmental solutions as a result of circumstances, using their existing knowledge, or a result of an opportunity presenting itself. Respondent EM stated: “I sort of stumbled into it—it’s not that it particularly interested me… It came from an entrepreneurship place—I really wanted to initiate something new”.

Respondent NS also described reaching this field by coincidence: “I didn’t choose it… I founded the company with a public safety orientation and had some vision to turn elevators into an escape route during a fire… Then, during this development and after proving it in stage B, we slightly clashed with the go-to-market, which is very scattered regulatory-wise. Then we turned east to Asia, and during that, we understood that there are more suitable markets for the technology we developed… and we are currently very climate-focused”.

Respondent JD described brainstorming with other students he intended to create a new venture with, not specifically an environmental one.

“I didn’t have any specific goal (like) a startup in the world of bees. As we sat down and started working on what to do, everyone said what was important to them… It was very important to me to have a physical product, not just a concept. Everyone brought their expertise. And of course, I had a clear advantage in the world of bees.”

It seems that social capital was the catalyst for FS’s venture formation since his brother was one of three friends who had an idea but no knowledge about what to do with it.

“They were three scientists with an exciting idea, but they didn’t know what to do with it. So, I entered with another Israeli partner, and we took care of the business side.”

Similarly, UB also knew someone else who stumbled into an idea that seemed to have environmental and economic potential.

“It was quite opportunistic. One of my partners got frustrated while stuck in traffic and was annoyed by the inefficiency. He started investigating the event and realized there was a significant issue here. Through mutual friends, I and another partner joined, and we saw that there was a world that hadn’t changed since 1914… This means there is a huge opportunity both to build a very large company and to create an impact on the world. It seemed cool to us.”

Figure 1. Challenges faced by environmental ventures.

Figure 1. Challenges faced by environmental ventures.

4.1. The Challenges of Environmental Ventures

4.1.1. Long-Term Fundraising

Thematic investigation of the data yielded four main challenges that environmental ventures face (see Figure 1). The first challenge that we identified related to the need to fundraise for a venture that will likely take a long time to “ripen”. Environmental ventures are often innovative and often face technical challenges as well as challenges in assimilating their innovation into traditional organizations. Therefore, compared with non-environmental initiatives, environmental initiatives may take a longer time to be fully functional and yield profit. Thus, environmental ventures must depend on investors’ willingness to support the ventures for long periods.

Respondent NS stated that as an entrepreneur, one should expect the long road ahead: “…as an entrepreneur, you need to understand that it is a long and sometimes tiring process”. However, it seems quite a challenge to find patient funders. The difficulty of finding investors was mentioned as a major challenge by three of the seven respondents (EM, ET, FS). Respondent ET described this challenge and underscored the need for patient investors and partners to provide sustainable support for green ventures to overcome the many initial hurdles and realize their potential:

“The most significant challenge is showing immediate revenues in the short term. You need to find partners who are committed to sustainability in the long term, understanding that it’s a lengthy process and that immediate income isn’t always visible. It’s always in the background, trying to find partners and raise funds.”

Respondent FS described the difficulties of fundraising to maintain the venture until it becomes profitable as his biggest challenge.

“For me, the most challenging part has always been fundraising… We put significant effort into developing our products and making them marketable. Due to the lack of investment, I had to bring in money from somewhere else… Tech companies are often cash-burning… I always said that my most valuable resource is time because I ran out of money. So, we were either going to skip the challenge or end the company, and we ‘made it through’ several times. But it’s dangerous because if you put all your money into something and it doesn’t work out, there’s no second chance…”

4.1.2. Technical Difficulties

The second challenge that was apparent when examining the interview materials was various technical difficulties. Five of the seven respondents reported that one or more of their main challenges stemmed from technical difficulties (CR, EM, JD, NS, UB). These included different types of difficulties, such as the duality of environmental ventures, environmental challenges, market constraints, and regulatory changes and limitations.

Respondent UB referred to the inherent duality of environmental ventures aspiring to “do good” but also to do well financially: “In the end, a company needs to create some real value for the world, and on the other hand, some companies have the potential to do good for the world as well”.

The dual nature of the environmental venture was also discussed by respondent NS, who described both the economic and environmental motivations as competing powers:

“I think everyone who works with me in the company is looking for sincerity and energy that will lead to a significant impact, and that’s a big part of the motivation. Of course, there’s a desire to succeed financially and it’s not an NGO, part of the interest is to find the right value chain and reach a satisfying Value proposition.”

The difficulties of this duality are stressed by the description of the many technical challenges that are associated with managing the intricacies of an innovative venture that are not unique to environmental ventures. While not unique to environmental ventures, these are added challenges to those that environmental ventures face. Respondent UB noted:

“In the company, there are routine challenges… From the inside, there are endless challenges, from global chip shortages to specific customer issues or recruiting for a specific role that takes longer than expected.”

Some environmental ventures focus on natural industries like agriculture that are affected by natural causes. Respondent JD described difficulties stemming from natural causes.

“…the weather changes that greatly affect our production. The trees need certain conditions, and if they don’t get them, our production will be harmed. This decisively affects the yield in the end…”

Once a solution exists, people and organizations need to be aware of the need for the solution and its existence, respondent EM described a lack of public awareness and lack of awareness in the industry. EM referred to the need to educate and inform the public and the industry of the existence of environmental solutions:

“In general, we’ve been doing a lot of marketing activities for many years, especially until two years ago, and even now we’re actively educating the market. Essentially, we’re telling them that there’s a product that can replace plastic, and it’s just as good as plastic. That’s our message.”

Respondent CR also spoke of the need to educate the market, yet he referred to education regulatory bodies: “This includes efforts with regulators and also addresses education for the sake of regulatory understanding. Collaborative education for solutions”.

The field of environmental ventures is highly affected by regulatory changes. Accordingly, regulatory changes were depicted as highly influential by the respondents. These changes were repeatedly depicted in the interviews as both challenges and opportunities. Respondent EM noted:

“If a regulation supports our products, we seize the market. If it’s against us, we either reduce our activities or adjust them, focusing on different areas.”

This view was also represented in the words of UB:

“Regulation is crucial in many areas, and some changes can significantly affect a business, while others might have a smaller impact. It varies in different directions. Some regulations are more restrictive, while others enable opportunities.”

Other respondents, like JD, had similar views depicting regulatory shifts as unpredictable demanding quick adjustments, but also opening new opportunities:

“…there are things that can affect you, like a sudden decision on importing something that you need to deal with promptly, see how the market reacts and how you cope with it to your advantage. See where the wind blows and try to be in the best position even after the change, to be the factor in the market that’s easiest to affect.”

Respondent NS referred to two specific difficulties regarding regulation. He referred to unclear or inconsistent regulation and restrictive regulation slowing down already challenging development processes:

“Then, during this development and after proving it in Area B, we slightly clashed with the go-to-market, which is very scattered regulatory-wise… When it comes to the place of hardware, software, regulation—you are aiming yourself for a very slow marathon process and you need to feel that the marathon is worth it.”

Additionally, respondent JD emphasized the critical need for solid relationships with government agencies highlighting their significant role in shaping regulations. He pointed out the varying degrees of regulatory influence across different countries and regions:

“Creating connections in the government in Australia, because it’s a country with a lot of regulation and small changes, can be impactful. Connections in the government are super significant in this country.”

4.1.3. Traditional Industry Players

The third challenge involves navigating the competitive landscape dominated by well-established and traditional industry players. Three of the seven contributors referred to this challenge (FS, JD, NS). As respondent FS stated, these players prefer to work with familiar or similar people and organizations: “…people like doing business with like-minded people or that they have previously worked with”.

Green entrepreneurs often operate in traditional sectors like agriculture or manufacturing, where there is notable resistance to change. In these areas, individuals and businesses may be skeptical about integrating new technologies. This skepticism is often rooted in a preference for tried-and-tested methods over newer, less familiar green technologies or practices. Respondent NS described this challenge:

“It (the product) mainly addresses very traditional industries. Factories, heavy manufacturing plants, the oil refining industry, concrete, fertilizer. These are very traditional industries, very rigid. In such a content world, there are fixed suppliers who are equipment suppliers… Technology is not enough—it’s good, it’s important and necessary, but it’s not enough.”

Similar sentiments were also expressed by respondent JD who works in the agricultural industry:

“The people we work with did not grow up around technology, and it’s not intuitively what they use as a solution. They see a problem and instead of solving it with technology, they’ll say—okay, let’s work harder. That’s how they operate. When I come to them with high-tech, machine learning, data science, and AI, it often scares them more than anything else. They don’t immediately jump on the idea, they are first suspicious, wanting to know that the government isn’t tracking them. It’s a different world that isn’t always open to technology, and you need to learn how to deal with it. You need to show value very quickly.”

4.1.4. Pioneers in Their Fields

The fourth and final challenge that the interviews exposed revolves around the pioneering nature of green initiatives, an issue mentioned by four of the seven respondents. It means there are no existing benchmarks or precedents to guide them. Meaning there is no reference to a standard or point of reference against which things can be compared or assessed. It is crucial for setting goals, measuring progress, and evaluating performance relative to peers or industry standards. Benchmarks are significant to entrepreneurial success as they provide means for investors and entrepreneurs to measure the effectiveness of their strategies, understand their position in the market, and make informed decisions. The absence of benchmarks complicates the process of setting clear objectives and milestones, making it challenging for both entrepreneurs and investors. Without established standards or comparisons, it becomes significantly more difficult for investors to assess the potential success of these ventures and predict their return on investment. Respondent FS stated:

“Unlike other fields where multiple companies are operating, we are currently the only ones in our field. There’s no competition, no experience, and no market. Therefore, there are no investors.”

A similar description was given by EM, who found it difficult to draft investments without clear benchmarks:

“When we started, and it was a relatively new field, the main challenge was finding investors. When you invest in an existing ecosystem, for example, investing in apps or cybersecurity, there are established markets. You can say, “This company has been very successful; I’ll do something slightly different, so I’ll succeed.” There was no point of comparison; there was no benchmark. We were unique for many years.”

Respondent JD also described the experience of bringing a new method to the field, however, he sees it from the point of view of someone who was able to establish this new method and turn it into the new industry norm:

“We did come with a new business model, and more or less, most of the industry today knows the business model we use, and many have switched to using it.”

Figure 2. Social capital as a response to challenges.

Figure 2. Social capital as a response to challenges.

4.2. Social Capital as an Answer to the Challenges Faced by Environmental Ventures

The second main issue we identified in our analysis is the way environmental entrepreneurs utilize social capital to face their challenges, see Figure 3. We were able to categorize the utilization of social capital to face those challenges into three categories.

4.2.1. Business Opportunities

The first category emphasizes leveraging social capital to exploit business opportunities via industry connections. All seven respondents reported using external or internal social capital to promote business opportunities. These opportunities include a range of possibilities, from forming strategic partnerships to acquiring new customers. Respondent JD said that his social networks and connections helped him overcome the fundraising challenge by connecting him with investors. These connections also facilitated partnerships and customer acquisitions. His contacts’ networks, particularly investors, further expanded his own, amplifying his reach and resources. We termed this phenomenon a snowball effect.

“In the context of investors, the lead investor of each round brought the lead investor for the next round. In the context of farmers, when a farmer is satisfied with me, he will tell his friends, other farmers, and thus I will have more customers—the same goes for other professionals that we work with.”

Respondent NS emphasized the critical role of connecting with the relevant stakeholders. This means a stakeholder that has solid connections within the industry:

“No matter how good I am, as long as I don’t come with a player in the industry that is recognized and accepted by them, the ability to promote something and advance in business will be difficult.”

Respondent FS underscored the importance of trust in personal connections, especially when there are no current metrics. Unlike most companies that operate in a crowded market, environmental ventures are often unique and lack benchmarks, meaning it is hard for entrepreneurs to signal good performance. Thus, instead of relying on benchmarks, investors must rely on trust and gut feeling regarding the venture:

“Everyone who joins does so because they believe in what we’re doing and want to contribute. Most investors joined because they had a good gut feeling about it. This is unlike other fields where there are already companies operating… We operate in the sea, and there are no technologies there. Nothing new has been invented there since they created the boat. It’s not an ideal situation for fundraising.”

Respondent CR also highlighted the critical role of personal connections and mutual trust in securing the initial investment for his company. This trust was so profound that decisions were made almost instinctively, with the investor’s belief in CR’s vision serving as the primary basis for the investment:

“My initial investment in my company came from an investor I had met a few times without any intention to raise funds. It was a WhatsApp message in the middle of the night. He wrote that they were transferring one and a half million dollars for investment. I hadn’t planned to raise funds at all, but he said I needed the money. I asked about the terms; he typed them out. I asked if they were fair, and he said yes. So, I told him to send the documents, and that’s it.”

4.2.2. Knowledge and Expertise

The second category emphasizes the significance of utilizing social capital as a source of information, knowledge, and expertise. All seven respondents reported using social capital to gain knowledge and expertise for their ventures. This encompasses a broad spectrum of insights, ranging from understanding market trends to gathering intelligence on other ventures and getting advice from industry veterans or specialists with unique expertise. By leveraging their network, entrepreneurs can access information that might otherwise be inaccessible, providing them with a competitive edge.

Respondent EM highlighted the significance of leveraging industry contacts for insights on company operations, including production and development, beyond just research reliance. She noted the utility of her network in facilitating connections with potential partners or specific stakeholders:

“For example, when it comes to production issues, and investment in development, I rely on various sources within my network. I’m not just relying on research and such. Sometimes we also want to reach a specific manufacturer or customer, and then we use our entire network.”

Respondent JD shared his strategy of utilizing his social connections to gain access to valuable information for the company. In this case, he could get the information in other ways but it would have taken him much more time. For a small startup in its early stage, this could be a game-changer:

“For example, if I want to know who the early adopters in the industry are, I could get a list of phone numbers of all almond growers in California and contact them one by one. It would take a lot of time, and I might run out of money, and the company would die. On the other hand, I could start building certain connections and then use them to understand the early adopters and move forward from there—I think that’s the way to do things.”

Respondent UB outlined that he leverages his network to address any relevant issues by seeking out domain experts appropriate for the specific challenge at hand:

“It’s all about the goal. If there’s a specific question relevant to someone’s expertise. If I have accounting doubts about recognizing income or the business model, then I have financial people I can turn to for these matters. It’s very dependent on the domain. For highly specific fields, like an optics expert or a plastics expert, and other niche cases, I would consult with them about these specific areas.”

Respondent CR stressed the significance of drawing on the wisdom of others who have previously navigated the same complex scenarios he encounters. This approach of consulting on metrics and objectives with those experienced in similar matters underscores the critical role of trust-based relationships in his professional network:

“(having) Benchmarks is the main issue. The ability to receive specific advice in the face of a specific dilemma mainly saves time in decision-making based on a trust circle. The fact that I have a trust circle I can turn to, someone who has dealt with a similar issue, and I can take their advice and experience—it’s very helpful.”

Additionally, respondent CR underscored the extensive diversity that he has in his network. When he was asked about the level of diversity in his network, he answered:

“In my opinion, it’s incredibly diverse. I think that it’s my superpower. It’s not just about people working in a specific industry.”

Respondent FS elaborated on the expansive reach and varied composition of his professional network, highlighting its global span and cross-industry nature:

“We work worldwide, so I have connections with people all over the world, not necessarily from a specific industry. Generally speaking, I work with people in the climate arena, but that’s a title that encompasses a lot of different things, and it’s not specific at all.”

Interestingly, most respondents did not set out to lead an environmental venture but had either stumbled upon an opportunity to do so, often by knowing others who raised a problem or had a possible solution to one. This process is described by EM:

“I sort of stumbled into it—it’s not that it particularly interested me, and I worked on it… I wanted to initiate something new… I opened my eyes to it. It all started with a kind of discussion I had with my children about plastic bottles they take to school and packaging, and I said to myself that today it’s a problem, more than 10 years ago, and it’s clear that it requires a solution that integrates better into our lives.”

Respondent FS also describes his entrance to the environmental ventures world as somewhat coincidental, as his brother and friends had an idea they did not know how to develop.

“The three technical founders… one of them, the founder and the mind behind the idea, is … who is also incidentally my eldest brother… They were three scientists with an exciting idea, but they didn’t know what to do with it. So, I entered with another Israeli partner, and we took care of the business side.”

Respondent UB also described a similar process:

“One of my partners got frustrated while stuck in traffic… He started investigating the event and realized there was a significant issue here. Through mutual friends, I and another partner joined, and we saw … There was a huge opportunity both to build a very large company and to create an impact on the world. It seemed cool to us.”

Respondent ET also stumbled into environmental venture sphere:

“To be honest, it’s just a few twists and turns… In general, it was a curiosity to find environmentally friendly and more efficient materials.”

Respondent NS tells a similar story:

“I didn’t choose it. I chose a bit to the side… During the research … we realized that we need to focus on technology (that led to the environmental sector).”

4.2.3. Expanding Social Capital

The third category revolves around the strategic expansion of an entrepreneur’s social capital through their existing social connections. By leveraging the trust and positive reputation within their current network, entrepreneurs can generate social recommendations, effectively creating new connections. The value of existing relationships can be instrumental in building an even more extensive network. We dubbed this strategy of potentially exponential growth in social capital the social capital snowball effect. Four of the seven respondents reported using this method.

Respondent EM describes utilizing her existing contacts to bridge connections to individuals outside her immediate network, emphasizing the strategic use of her company’s internal resources:

“Environmental organizations aren’t included in my primary network, but there are people in our company who work in this field, and through them, I can reach them.”

Respondent NS described that the people that he served with helped him by introducing him to other people, based on their acquaintance:

“My acquaintance with people who served with me led to their willingness to try to open doors for me abroad with their networking.”

Respondent JD detailed how he utilized the social capital “snowball effect” to secure funding, with each investor introducing the following investor. This principle also applied to expand his clientele, as satisfied customers would recommend their service to their acquaintances, thereby growing his customer base and establishing new partnerships:

“In the context of investor worlds, the lead investor of each round brought the lead investor for the next round. In the context of farmers, when a farmer is satisfied with me, he will tell his friends, and other farmers, and thus I will have more customers. The same goes for beekeepers we work with.”

The respondents were asked about the association between their networking strategies and their success metrics, meaning to what degree their social capital contributes to their success.

Respondent EM explained that she does not think there is a correlation of 100% and that the amount of the network’s impact depends on the sector and emphasized it by stating the difference between the impact of networking in fundraising, compared to customer acquisition and working with suppliers. She underscored the necessity of building a network and maintaining it:

“There is a correlation. If it’s 100 percent, I don’t think so. It also depends on the industry. In the investment sector, the correlation is expected to be higher. In the customer and supplier sector, it’s less, but there’s still a certain correlation. Networking is important; things can work without networking, but in my opinion, it’s much harder. In the investment and fundraising sector, networking is necessary. You also build it. You also need to maintain it over time.”

Both respondent JD and respondent ET explained that they think it is hard to measure the impact of social capital on success. Respondent JD describes the effect of social capital on success as positive:

“There’s no doubt that the correlation is positive, and there are many things that are hard to put your finger on and measure. It’s hard to measure the impact. Practically I see that today most people already know the name of the company.”

Respondent ET said that some can also succeed without a strong connection and that the level of impact depends on the entrepreneur:

“I believe there is a correlation, but it’s challenging to measure. It’s more about the genuine belief that having a deeper and more serious network can lead to more significant benefits. Some succeed without a broad network, while others have extensive networks but still struggle. So, there is a connection, but it’s challenging to quantify. It’s very individual and not easily measured.”

Despite the difficulties in assessing the association between social capital and venture success, it is important to stress that we just saw the respondents note that it is used to attain knowledge, expertise, and business opportunities.

Figure 3. Sources of social capital.

Figure 3. Sources of social capital.

4.3. Sources of Social Capital

The final issue revolves around the different sources of social capital that were identified in the interviews. We identified four main sources, as illustrated in Figure 3.

This segmentation highlights the various ways through which entrepreneurs can leverage their social connections. By identifying and understanding these sources, entrepreneurs can strategically develop their networks, enriching their ventures with a broad spectrum of support, knowledge, and opportunities.

4.3.1. Childhood

The first source of social capital that stems from relationships formed during childhood and within the family was depicted by two of the respondents. These foundational connections provide a deep-rooted network of trust and support, offering a unique blend of personal and potential professional leverage.

Respondent FS became the CEO of the company while his older brother invented the idea that the company is based on:

“We were five founders: three from the research side and two from the business side. one of the three technical founders and the mind behind the idea is my eldest brother.”

Respondent UB met his founder through a mutual childhood friend:

“I met one of the founders through a mutual childhood friend. She used to work with one of the partners, and today, she also works as a senior in the company.”

4.3.2. Early Adulthood

The second source of social capital arises from connections established during early adulthood, as was described by four of the respondents (CR, ET, JD, NS). Early adulthood associations are characterized by diversity and cohesion due to people of different backgrounds sharing experiences and challenges. This combination of strong bonds with diverse networks can benefit entrepreneurs. Such connections often extend beyond personal relationships, providing access to a wide range of professional opportunities, mentorships, and collaborations.

Respondent JD described how he met his co-founders through a program at college.

“Just as I finished the degree… a new program opened… I think the deans of each school had to recommend 2–3 students for this program. I was accepted. I started the program. The program had its better and lesser parts, but what’s important is that I met my co-founders there.”

Respondent ET described the associations between the three that became founders, stating that they two met at university and he knew one of them from a previous job: “I met one of the founders in my previous job…The other partner he brought in from university”.

Respondent CR described that he met the founders he worked with during his time in the military. He did not work directly with them, but they were part of the ecosystem:

“I met the other founders during my military service. These were people who worked alongside me, highly qualified individuals who were part of the ecosystem I grew up in during the service, and we had various interactions. One was in the development field, and the other in the operational field.”

Respondent NS also emphasized his military service as a source of crucial social capital.

“My network is relatively extensive, mainly. It first started with people who were with me in the military, who were discharged before me, and when I retired, they helped teach me, assist me, make connections, and integrate factors into the network.”

4.3.3. Social Online Networks

The third source of social capital is derived from online social networks, as described by three of the seven respondents (ET, FS, UB). These digital platforms facilitate the creation of global and professional connections that span across various industries. They offer an opportunity to access a wide array of expertise and collaborate with professionals from diverse fields. This source of social capital is particularly valuable for its ability to bridge geographical and sectoral divides, enabling entrepreneurs to expand their networks far beyond their immediate physical environment.

Respondent ET emphasized the importance of “LinkedIn” in developing industry connections. He explained that while the local network is important for establishing partnerships and joint ventures in the initial stages, once you grow, you look to expand your network internationally.

“Thanks to LinkedIn, the world has become very global, and many of the connections are not necessarily from Israel. There’s no doubt that the local network is very strong, enabling both joint activities in Israel and outreach to various active groups, be it funds investors, partners, etc. But as we grew, I would say that the professional network related to the industry developed significantly through LinkedIn.”

Respondent FS also described LinkedIn as a valuable tool.

“The only social network I’m part of for professional purposes is LinkedIn. I think it’s a very effective tool for conveying messages to a targeted audience. I receive audiovisual messages from targeted audiences. It’s very fertile and productive.”

Respondent UB referred to conferences as well as various online social networks as the basis for obtaining information and connections.

“I think in our world, conferences and events are crucial sources…and industry WhatsApp groups and forums like LinkedIn…LinkedIn, in my opinion, is a very efficient tool, as well as Twitter, especially when dealing with Americans. And again, conferences—we invest quite a bit in those. And of course, investor relations. For example, when we close a big deal, my interest is that the whole world knows about it, so LinkedIn and investor relations come into play.”

4.3.4. Common Acquaintances

The fourth and final source of social capital is derived from common acquaintances and the snowball effect within one’s network. This means that new social capital can emerge from existing relationships within the entrepreneur’s network, where one connection leads to another, creating a cascading effect of expanding contacts. This method was described by three of the seven respondents (EM, ET, JD).

Respondent JD described the venture’s development as a string of connections, with every connection leading to the next one.

“In the context of investor worlds—the lead investor of each round brought the lead investor for the next round. In the context of farmers—when a farmer is satisfied with me, he will tell his friends, other farmers, and thus I will have more customers.”

Respondent EM described that she utilizes her existing connection to reach other relevant partners:

“Sometimes we also want to reach a specific manufacturer or customer, and then we use our entire network.”

Respondent ET also described a network of new connections that opens up with each association in one’s social network.

“For example, one of the Chinese investors introduced us to the manufacturer we are currently working with, which has certainly helped us to enhance the manufacturing capabilities of the cells. One investor introduced another investor. So, each one brings their network, experience, and connections.”

5. Discussion

Our aim in this research was to understand the challenges faced by environmental entrepreneurs and how they see the use of their social capital management as a means for overcoming these challenges. Some studies claim that social capital may have either positive or negative effects depending on the organizational context [62]. However, broader findings highlight social capital’s crucial role in enhancing competitiveness and human development, providing environments conducive to trust, cooperation, and business growth [90]. Social capital is associated with new product development in small ventures [23]. Bridging social capital improves small initiatives’ access to knowledge, and both bonding and bridging social capital improve entrepreneurial performance [16]. It is also known that social capital increases the effects of social entrepreneurship [57]. Despite all that is known in the matter, the role that social capital takes in facing the unique challenges of environmental entrepreneurship has not yet been examined. This study aims to begin answering this gap as it extends the current understanding of social capital by specifically examining its role in the unique context of environmental entrepreneurship.

Interestingly, most of the entrepreneurs that were interviewed in this study did not intend to establish an “environmental company”, but rather, it was opportunism that led them to do it. Some of the entrepreneurs mentioned that when they first started, they wanted to establish some kind of venture, but it did not necessarily have to be in the “green field”. They describe being a part of a social group (friends, family, colleagues) with people having varied expertise that bonded over an issue or a question. Together, they thought of an idea that they believed could become a successful company, and it happened to be also good for the environment. They thought of an idea that they believed could become a successful company, and it happened to be also good for the environment. This view stresses the importance of social capital to venture formation, as social capital was crucial to the promotion of the ventures during the initial stages. The literature tends to distinguish between “external” bridging social capital and “internal” bonding social capital [16,19]. However, it seems that the entrepreneurs turned “external” bridging social capital into “internal” bonding social capital, making the distinction between the two more permeable. They did so by incorporating into their initiatives people they already knew, trusted, and shared values with and by using external connections of others within the venture. Building on these insights regarding the formation of environmental ventures, we now turn to examine how social capital helps overcome operational challenges. Environmental ventures seem to face many challenges, including fundraising difficulties, difficulties stemming from the dual nature of the environmental ventures, managerial challenges, the need for market and regulatory education, unclear or inconsistent and changing regulations, and the challenge of penetrating traditional industries. These challenges were previously discussed in the literature [6,10]. Our respondents also stressed that the ever-changing inconsistent regulation may hinder product development. However, it may also create opportunities and should be seen not only as a challenge but also as a possibility for the advancement of the venture.

Another issue that plagues environmental ventures is the need for exceeding patience through the long journey of developing initial innovative solutions. These ventures are often innovative by nature. Therefore, they have no clear benchmarks, and they often face a lack of awareness while trying to integrate their solutions into traditional industries. The respondents associated these challenges with the difficulties in achieving initial funding. For supporters and funders to maintain their support under such circumstances, they need to have a great deal of faith and trust in the venture and its management. The respondents reported using their own personal social connections and reputation to gain and maintain this trust. This aligns with findings from broader studies that highlight how social capital complements traditional economic resources, thereby enhancing the innovative capacity and economic performance of countries [91].

We categorized four main ways in which the environmental entrepreneurs who were interviewed used social capital. This includes utilizing social capital to create and exploit business opportunities, using it to attain information and knowledge and secure expertise, and finally, using their social network to increase their social capital. Past research found that entrepreneurs in new ventures utilize their managerial ties to exploit opportunities [92]. It is also known that social capital has a positive effect on the ability of entrepreneurs to recognize business opportunities [93,94]. However, while social capital provides significant advantages, its impact can vary depending on the venture’s sector, the strength and diversity of networks, or the cultural context in which the entrepreneur operates [78,95].

We found that the respondents reported that strategic use of their social capital allowed them to overcome many of the challenges environmental ventures face. The respondents claimed that social capital was essential for obtaining the financial capital needed. Also, in the absence of clear benchmarks for success, funders’ trust in the people who manage the venture is crucial. The challenges in assimilating innovative solutions to traditional industries are also somewhat lessened once there is an acquaintance and basic trust with those industry players. Finally, the challenges associated with managing an environmental venture may ease when properly using advice from very diverse, experienced sources. It is known that entrepreneurs in new ventures utilize their managerial ties to exploit opportunities [92].

Respondents stated that they cultivate their social network to be not only as wide but also as diverse as possible. One respondent even went as far as calling the development of a wide and diverse network his “superpower”. The respondents referred to diversity in social networks as a solution to diverse knowledge bases and social spheres that are needed to promote their ventures. Diversity of social capital is a well-known component advancing entrepreneurial success [21]. Social capital plays a vital role in driving innovation and collaborations between organizations [75]. We found that environmental entrepreneurs are aware that they act in a multi-faceted field and thus consciously work not only at widening but also diversifying their social network to better face the challenges of environmental ventures.

The respondents described how entrepreneurs utilize their social capital to receive information and knowledge they may not have access to in other ways. As Johnson describes, people are easier to approach than formal information sources; therefore, they choose the least effort option [96]. Additionally, people who choose people as their source of information have better chances to find the information they are looking for [96].

The respondents recognized the complexity of their industry, filled with a range of scientific innovations, diverse companies, and intricate regulatory frameworks, each demanding specialized knowledge and skills. Given this complexity, it is unrealistic for any individual or small team to master every aspect of the field. This underscores the critical importance for entrepreneurs to strategically leverage their social networks, ensuring they encompass a wide array of expertise to navigate the industry’s challenges effectively.

The respondents also described their use of social capital as not just knowledge but also expertise. They develop their social network to allow them to reach industry experts that provide them access to diverse, highly specialized expertise. This strategy allows them to face issues that stem from the cutting-edge nature of their ventures, as there is no existing knowledge specific to their field and instead, it touches on an array of scientific, regulatory, legal, social, and, of course, environmental issues. This utilization of social capital as a way to gain access to experts with specialized knowledge was explored by Cornwell and Cornwell, who also urged further research to examine the causes of disparities in social network ties to experts [97].

The respondents also reported that they leverage the trust and reputation within existing relationships to create new ones. In essence, each relationship within these networks can lead to further connections that in turn may also lead to other connections, effectively causing the entrepreneur’s social capital to grow exponentially in both value and utility. Social capital connection is often based on trust [98]. This is crucial, as each of these iterations receives the value (trust, recommendation) from the previous one. This enhanced social capital then facilitates access to more resources, knowledge, and opportunities, underscoring the vital role of robust social networks in entrepreneurial success. We refer to it as the “snowball effect” of social capital. This effect allows for fast, officiant, and diverse growth of social networks.

Entrepreneurs have expressed that assessing the impact of social capital on their success is challenging. This difficulty arises primarily because social capital is a multidimensional concept having different dimensions, types, and levels of measurement [55]. As a result, distinguishing between the contributions of social capital to success and the influences of other elements—such as perseverance, effective social skills, high self-efficacy, and strong internal control—becomes complex [99]. Social capital, while vital, is part of a broader ecosystem of personal attributes and external conditions that affect entrepreneurial success. Some of the challenges in assessing the direct effects of social capital are also associated with the fact that we begin to accumulate it very early on in our lives [100]. So much so that it becomes a part of who we are. Some respondents reported using connections from their childhood, social knowledge they acquired in childhood, relationships that were forged during early adulthood, etc.

5.1. Practical and Theoretical Contributions

This paper contributes to the existing literature in several ways. It introduces some ways in which social capital is used to promote environmental ventures. While the impact of the broader influence of social capital on entrepreneurial success has been explored in prior studies [101], the dynamics presented within environmental ventures have not been specifically addressed. We also address the motives for the creation of environmental entrepreneurship and the role of existing social connections in the formation process of these ventures. Moreover, we were able to categorize how environmental entrepreneurs utilize social capital to face the challenges that are specific to environmental ventures. We also refer to the intentional ways in which entrepreneurs develop social networks by using a “snowball” method.

A key takeaway message is the realization that the drive for environmental entrepreneurship often originates from a broader entrepreneurial spirit. Environmental entrepreneurs share many of the same motivations as entrepreneurs in any field. Finally, this paper highlights the importance of the “snowball effect” of social capital. The entrepreneurs that were interviewed described the influence of trust and reputation existing in one circle, creating an almost immediate trust in additional new relationships. This utilization of social capital can lead to a beneficial cycle, where established trust and reputation serve as a foundation for expanding the entrepreneurs’ network and enhancing their venture’s success.

5.2. Practical Recommendations

5.2.1. Recommendations for Policymakers and Funders

A supportive regulatory framework is essential; policymakers must ensure that environmental regulations are clear and stable to encourage innovation. This includes enabling early examinations of solutions and granting preliminary approvals, which simplify compliance and help ventures secure financial support. Policymakers play a vital role in promoting environmental solutions and should prioritize targeted investor education to raise awareness about the long-term benefits of sustainable ventures. They should also advocate and create financial incentives for long-term funders of environmental ventures, as well as support online and offline networking platforms, such as Hubs, that will enhance collaboration among environmental and social entrepreneurs and scientists. Since environmental entrepreneurs seem to reach this field via opportunities seeking, the policymaker should create and advertise opportunities for the promotion of environmental ventures.

Investors should be patient and genuinely believe in the environmental ventures they support. When evaluating opportunities, they can assess entrepreneurs’ social capital. Creating mentorship and networking opportunities will enhance entrepreneurs’ social capital and facilitate their growth and success.

5.2.2. Recommendations for Educators

Our findings highlight the crucial role of diverse social networks and the potential of college projects to transform into viable environmental ventures. Educators, especially in entrepreneurship, business management, and environmental science, should actively promote interdisciplinary collaboration. By orchestrating projects that unite students from various disciplines to address environmental challenges, they lay the foundation for successful ventures (environmental and others).

Teaching social capital skills—such as networking, relationship building, and trust—empowers students in environmental entrepreneurship. Collaborating with mentors further enhances social capital and teaches students how to utilize it effectively. Educators should formalize mentorship programs to provide structured guidance and create networking platforms that connect entrepreneurs, scientists, and environmental advocates to foster collaboration and resource sharing.

5.2.3. Recommendations for Entrepreneurs

Entrepreneurs should focus on nurturing strong relationships, recognizing that their social networks, including friends and family, provide a significant business advantage. They should actively seek support, referrals, and advice from these connections. Using the “snowball effect” strategy, entrepreneurs can position themselves as reliable resources to encourage referrals and expand their networks. Additionally, cultivating weak ties and maintaining casual contacts can lead to unexpected opportunities. Entrepreneurs should aim to include influential figures and advocates in their networks to enhance outreach and engage in policy discussions that support sustainable practices.

5.3. Limitations and Future Directions

This paper serves as a preliminary examination of the influence of the social capital of green entrepreneurs on the success of their ventures. However, it is important to note that environmental ventures vary widely. The challenges they are facing and the types of solutions they propose can differ significantly from one venture to another. For instance, our findings indicate that entrepreneurs relied heavily on their childhood and early life social environment. However, this may be less applicable to ventures in fields that require very specific or rare knowledge or skill sets, where experts are unlikely to be found in one’s initial or even secondary social circle. Therefore, it is crucial to further investigate this topic, taking into account the diverse characteristics of various environmental ventures and the ways these characteristics can affect the roles social capital may play in their success. This nuanced approach will enable a more comprehensive understanding of the role of social capital in the diverse landscape of green entrepreneurship.

Our research examined environmental entrepreneurship from a non-comparative standpoint. This approach allowed us to explore the sector’s unique dynamics without comparing it to traditional business models. As a result, we are unable to clearly distinguish between the impacts of social capital in green ventures versus those in non-environmental fields. Future research should explore these differences to provide deeper insights into the unique challenges and opportunities that are associated with social capital in green entrepreneurs compared to entrepreneurs in other industries.

Future research should also examine whether the patterns that we identified are similar across various countries, initiative stages, and geographic locations. Countries may vary in regulations (e.g., having requirements for diversity within the venture itself), which could also affect the applicability of personal social capital (which often includes people from similar backgrounds). Countries may also sport different cultural aspects like levels of trust, cohesion, and communication style that may affect the ways social capital is acquired and used. Communication patterns (direct vs. indirect) or levels of trust are examples of cultural aspects that may influence one’s ability and methods of using social capital. While we examined initiatives in various stages, the use of social capital and its effects may vary throughout the venture’s stages. Future studies can conduct longitudinal studies to examine this issue.

Assessing the direct impact of social capital on entrepreneurial success presents a complex challenge since it is deeply integrated into the entrepreneur’s personality. Social capital, with its emphasis on networks, trust, and relationships, plays a critical role in entrepreneurial success, yet it is only one of many contributing factors. Further exploration into how social capital interacts with other aspects of the entrepreneur’s character beyond social skills and business strategy could shed light on its effect on entrepreneurial success [102]. Another issue that was outside the scope of this research and should be examined in the future is the negative versus positive effects of internal social capital. Since social capital is known to have some maladaptive aspects, including negative effects on problem-solving and decision making, its usefulness should be compared to its drawbacks in various situations [60].

Qualitative research allows the researcher the freedom to examine new constructs and fields while pursuing new issues that may come up during the research process from the subjective point of view of the respondents [67]. Given the qualitative, self-reported nature of our research, future studies could adopt a quantitative approach and use a larger and representative sample to further explore this phenomenon, acknowledging the inherent challenges of quantification and generalizability. Future studies could involve non-self-reported methodologies, such as social media network analysis or the utilization of objective success metrics, to provide a more rounded understanding of social capital’s impact on entrepreneurial outcomes.

5.4. Conclusions

Environmental entrepreneurs use their social capital in various ways to rise to the unique challenges faced by environmental ventures, intentionally developing it to be diverse and not just broad to best suit those challenges. Furthermore, environmental entrepreneurship seems to arise from a social context where a question, difficulty, or desire to promote an initiative exists rather than from a pre-existing tendency towards environmental initiatives. Social capital is an integral part of these ventures from the beginning. Since there does not seem to be any unique motivational specificity, fostering environmental entrepreneurship through external means and enhancing it by promoting connections between entrepreneurs and scientifically knowledgeable individuals (even those without entrepreneurial tendencies) seems both possible and advisable.

This research also reveals ways in which environmental entrepreneurs report leveraging their social networks strategically. The entrepreneurs reported using social capital to create and exploit business opportunities, reach information and expertise, and expand their influence through a “snowball effect” of trust-based connections. The challenges of fundraising, regulatory inconsistencies, and market education seem to be mitigated through the strategic use of social capital. To support these ventures, policymakers, educators, and investors should focus on creating supportive ecosystems with clear regulations, interdisciplinary collaborations, and patient capital. Future research should explore cultural variations and the interplay between social capital and entrepreneurial success factors to promote a better understanding of this dynamic field.