Factors that influence the establishment of venture capital firms in Kenya
Date
2013
Authors
Ngaruiya, Jane Wangari
Journal Title
Journal ISSN
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Publisher
Strathmore University
Abstract
The purpose of this study was to investigate factors that influence the establishment of venture
capital firms in Kenya. The research design adopted was descriptive. Data was collected through
semi-structured interviews from eight venture capitalists in 2012. Data obtained in the study was
analysed through descriptive methods and content analysis. The objectives of the study were to
identify the key factors that influence establishment of venture capital firms, challenges
encountered as they set up and the sectors of the economy preferred. The results showed that
macroeconomic variables specifically, Gross Domestic Product (GDP), interest rates and
inflation, performance of the market, funds from investors, expected rate of return and
networking among venture capitalists were the key factors considered in the set up of firms.
Challenges encountered were. scarce or no protection of investor's property, lack of proper
documentation by the entrepreneurs who venture capitalist considered to invest in their firms or
business, lack of proper valuation methods to determine the worth of a venture and lack of
qualified venture capital personnel. The most preferred sectors invested by the venture capitalists
were identified as manufacturing and health care. The study has contributed to the body of
knowledge as this is an area where there is scarce literature especially in the emerging markets.
Areas for further study include, establishing if there is ail increase in the venture capital funds
and the impact on the growth of the economy and to look further into the valuation methods used
to determine a venture and determine the best practice for emerging markets.
Description
A research thesis submitted in partial fulfillment for the Master of Commerce Degree
Keywords
Venture capital, Investment, Kenya, Business