Venture Capital and Growth of Small and Medium- Sized Enterprises in Kiambu County, Kenya
DOI:
https://doi.org/10.47941/ijf.1261Keywords:
Venture Capital Financial Support, Venture Capital Managerial Support, Venture Capital Technical Support, Venture Capital Monitoring, Growth of SMEsAbstract
Purpose: The goal of the study was to look into the impact of Venture Capital financing on the growth of SMEs in Kenya's Kiambu County. The specific objectives included to assess the influence of Venture Capital financial support, Venture Capital managerial support, Venture Capital technical support and attracting other sources of Venture Capital financing on growth of SMEs in Kiambu County.
Methodology: To achieve the goals, the study used a descriptive research approach. The target demographic included all 889SMEs in Kiambu County that are listed in the Kiambu Business Directory-(2021). The study used questionnaires and secondary data sheet as the data collection tools. The data collected was coded, quantified, processed and synthesized quantitatively and qualitatively.
Findings: The study found that financial support, managerial support, technical support and Venture Capital monitoring affects the growth of SMEs in Kiambu County. The study found that in overall Venture Capital affects the growth of SMEs in Kiambu County to a great extent. The study concludes that financial support offers essential paths for increasing the pool of trained labor, increasing the output of goods and services, creating jobs and providing opportunity to develop entrepreneurial and management abilities. Through Venture Capital managerial support, creative skills, research skills, and strategic technologies are provided which are positively associated with firm growth. Venture Capital monitoring frameworks are responsible for observation of business operations, standard of measurements are crucial in preventing business failures, and vibrant transparency and accountability measures are important in directing enterprises development endeavors. From the inferential analysis, an increase in the Venture Capital financing aspects leads to growth of SMEs in Kiambu County.
Unique Contribution to theory, practice and policy: The study recommends the SMEs in the County to partner with Venture Capitalists to benefit from financial support for greater successes. Venture Capital firms and SMEs to work together to form a friendly relationship through multi-party cooperation which will pave way for monitoring of the inputs and outputs of the Venture Capital.
Downloads
References
Apuoyo, O. (2020). venture capital financing and growth of small and medium enterprises in Nairobi city county, Kenya. PhD Thesis Article, Kenyatta University, Kenya.
Auerbach, Paul and Siddiki, Jalal (2004) Financial liberalisation and economic development: an assessment: 10
Biney, C. (2018). The Impact of Venture Capital Financing on SMEs Growth and Development in Ghana. Bus Eco J 9: 370. doi: 10.4172/2151-6219.100037
Dai, B.; Liang, W. (2022). The Impact of Big Data Technical Skills on Novel Business Model Innovation Based on the Role of Resource Integration and Environmental Uncertainty. Sustainability, 14, 2670. https://doi.org/10.3390/su14052670
EAVCA. (2016). EAVCA Private Equity Case Study Compendium for 2016: 10.
Ed-dafali, S., Chakir, A. & Bouzahir, B. (2018). Value-adding and Monitoring Activities of Venture Capital: A Synthesis Literature Review. Research Journal of Finance and Accounting, 7(22): 66-77.
Ed-dafali, Chakir and Bouzahir (2018) conducted a literature review on value-adding and monitoring activities of Venture Capital.
Gompers, P., Gornall, W., Kaplan, S. & Strebulaev, I. (2020), How do Venture capitalists make decisions? Journal of Financial Economics, 135, 169–190.
IMF Financial Operations 2018 Annual report (2018), International Monetary Fund Annual Report 2018 :11
Kato, A.I. & Tsoka, G.E., (2020). Impact of venture capital financing on small- and medium-sized enterprises’ performance in Uganda. Southern African Journal of Entrepreneurship and Small Business Management, 12(1), a320. https://doi.org/10.4102/sajesbm.v12i1.320
Kenya National Bureau of Statistics (2016) Economic Survey, 2016. KNBS, Nairobi. https://www.knbs.or.ke/download/economic-survey-2016/:20
The Kenya National Bureau of Statistics has released the 2019 Economic Survey report which highlights the country’s economic performance for the year 2018:6
The Kenya National Bureau of Statistics has released the 2021 Economic Survey report which highlights the country’s economic performance for the year 2020:2
Kidali, F.K. & Machio, P.M. (2020). Access to Credit and Growth of Micro, Small and Medium-Scale Enterprises in Kenya. Unpublished Research Project, Master of Arts in Economics, University of Nairobi, Kenya.
Lerner, J. & Nanda, R. (2020). venture capital 's Role in Financing Innovation: What We Know and How Much We Still Need to Learn. Journal of Economic Perspectives 34:3, 237–261.
Lexan, P. (2018), Tech for growing business: Now’s a great time to set your goals for 2008, and these technologies can help you meet them. Entrepreneur Hot List Press.
Lin, N., Liu, C., Chen, S., Pan, J. & Zhang, P. (2022). The monitoring role of Venture capital on controllers' tunneling: Evidence from China. International Review of Financial Analysis, 82(2): https://doi.org/10.1016/j.irfa.2022.102193
Matisone, A. & Lace, N. (2021). Effective venture capital Market Development Concept. Journal of Open Innovative Technologies and Marketing Complexity, 7, 218. https://doi.org/10.3390/joitmc7040218
Matisone, A. & Lace, N. (2020). The Impact of Public Interventions on Self-Sustainable venture capital Market Development in Latvia from the Perspective of venture capital Fund Managers. Journal of Open Innovative Technologies and Marketing Complexity, 6(1): 53.
Mboto, H., Amenawo, I. & Udoka, C., (2018), venture capital financing and the growth of small and medium-scale enterprises in Cross River State, Nigeria, Global Journal of Management and Business Research: C Finance 18(3), 2018.
Michael, E., Gorbenko, A.S. & Korteweg, A.G. (2020). venture capital Contracts, NBER Working Paper 26115.
Mugenda, O. M. and Mugenda, A. G. (2003) Research Methods: Quantitative and. Qualitative Approaches. Nairobi: Acts Press
Muli, D.M. & Wachira, K. (2019). Effect of access to finance on financial performance of processing SMEs in Kitui County, Kenya. International Journal of Finance and Accounting, 4(1): 75 - 89.
Myint, O. (2020). The Effect of Financial Access on Performance of SMEs in Myanmar. International Journal of Scientific and Research Publications, 10(6): 244-252.
OECD (2020), Financing SMEs and Entrepreneurs 2020: An OECD Scoreboard. OECD Publishing, Paris https://doi.org/10.1787/061fe03d-en
OECD., (2018). Enhancing the contributions of SME’s in a global and digitalized economy, Meeting of the OECD Council at Ministerial Level Paris, 7-8 June 2018.
Okangi, F.P. (2019). The impacts of entrepreneurial orientation on the profitability growth of construction firms in Tanzania. Journal of Global Entrepreneurship Resources, 9, 14. https://doi.org/10.1186/s40497-018-0143-1
Owen, R. & Mason, C. (2019). Emerging trends in government Venture Capital policies in smaller peripheral economies: Lessons from Finland, New Zealand, and Estonia. Strategic Change, 28, 83–93.
Owiredu, A. & Kwakye, M. (2020). The Effect of Corporate Governance on Financial Performance of Commercial Banks in Ghana. International Journal of Business and Social Science Vol. 11 • No. 5 • May 2020.
Owusu, J., Ansah, W.O., Djan, K.O. & Anin, E.K. (2021). Impact of financial resource building effort on financial resource availability among small and medium enterprises, Cogent Business & Management, 8:1, 1920676, DOI:10.1080/23311975.2021.1920676
Pierre, A., Fuchs, E., Goldstein, A.P. & Kearney, M. (2019). Funding Breakthrough Research: Promises and Challenges of the ‘ARPA Model, Innovation Policy and the Economy, 19.
Pitchbook, (2021), Global PE & Venture Capital Fund. Performance Report as Q4 2019, viewed from https://files.pitchbook.com/website/files/pdf/PitchBook_Global_PE_venture capital _Fund_Performance_Report_as_of_2Q_2018.pdf.
Sansa, N. A., (2019). A Critical Analysis of Effects of Loan Conditions on Accessibility to Loans by Small Businesses in Tanzania. Available at SSRN: https://ssrn.com/abstract=3315124
Suweiba, S. & Haibo, C., (2019). Exploring the effect of venture capital instruments and control mechanisms on growth of venture capital fund: Empirical evidence from Ghana’, Open Journal of Business and Management 7(1), 180–193, viewed 11 March 2022, from http://www.scirp.org/journal/ojbm
Taouab, O., & Issor, Z., (2019). Firm Performance: Definition and Measurement Models, Laboratory of Management Sciences, ENCG Kenitra, Ibn Tofail University, Morocco
Tehseen, S. Muneeb, D. Mahmoud, A. B. Hack-Polay, D. Yan, Y. H., & Nawaz, F., (2020). SMEs in the digital business sector: Examining six theories about digital SME success. In R. Ho, A. Ng, & M. Nourallah (Eds.), Impact of Globalization and Advanced Technologies on Online Business Models. IGI Global.
Ting, I.W.K., Tebourbi, I. & Lu, WM. (2021). The effects of managerial ability on firm performance and the mediating role of capital structure: evidence from Taiwan. Financ Innov 7, 89. https://doi.org/10.1186/s40854-021-00320-7
Van Song, N., Mai, T.H. & Thuan, T.D. (2022). SME financing role in developing business environment and economic growth: empirical evidences from technical SMEs in Vietnam. Environ Sci Pollut Resource, 2(1): 12-22. https://doi.org/10.1007/s11356-022-19528-w
Yaacob, R., Baroto, M. B., Kamarudin, S., & Arifin, N. (2019). Moderation Effect of Top Management Support on the Relationship between Customer Reference Marketing and Market Performance. International Journal of Academic Research in Business and Social Sciences, 9(7), 1263–1297
Zhang, Y. (2021). Impact Investing and venture capital Industry: Experimental Evidence. Available at SSRN: https://ssrn.com/abstract=3959117 or http://dx.doi.org/10.2139/ssrn.3959117
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 http://creativecommons.org/licenses/by/4.0
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work’s authorship and initial publication in this journal.
