In recent years, philanthropic venture capital (PhVC), a new way of financing social entrepreneurs, has captured a great interest within the philanthropic and venture capital (VC) communities. Triggered by the work of Letts, Ryan, and Grossmann (1997), PhVC started to emerge as an attempt to apply the strategies and techniques developed within the VC industry to social purpose enterprises. In this context, philanthropic venture capitalists (PhVCs) act as intermediaries who raise funds from wealthy individuals, enterprises, and/or foundations, to be invested in operating activities with a potentially high social impact.

Although debate on this topic may be found in the VC and philanthropic communities, academics have yet paid little attention to it. As such, no common definition of PhVC exists and no clear boundaries of PhVC financing have been drawn. The key aims of the paper are a) to define PhVC and philanthropic venture capitalists (PhVCs); b) to formulate four hypotheses aiming to test whether, how, and to what extent the typical for-profit venture capital (VC) model, as described by Gompers and Lerner (2001), can be applied to PhVC as well.