Designing impact due diligence for startups

This paper explores the challenges impact investors face in assessing the social and environmental impact of startups, as traditional venture investing tools cannot fully capture their unique characteristics. Following a design science approach, we identify three startup-specific design requirements in the literature and propose five design principles. Building on this, we present a conceptual impact due diligence that takes into account the specific criteria for evaluating impact-driven startups. We conduct alpha tests with expert interviews that confirm the overall practical relevance and applicability of the framework. The study makes a theoretical and practical contribution to research in sustainable entrepreneurship and sustainability accounting by identifying solutions to the specific challenges of valuing such startups. Practitioners can use the resulting conceptual artifact to adapt their impact evaluation practices.