TYPE OF VENTURE CAPITAL INVESTMENT, VENTURE CAPITAL CONTROL AND FINANCIAL GROWTH OF FUNDED SMALL AND MEDIUM ENTERPRISES IN NAIROBI CITY COUNTY, KENYA
TYPE OF VENTURE CAPITAL INVESTMENT, VENTURE CAPITAL CONTROL AND FINANCIAL GROWTH OF FUNDED SMALL AND MEDIUM ENTERPRISES IN NAIROBI CITY COUNTY, KENYA
Dancan S. Maragia - Department of Accounting and Finance, Kenyatta University, Kenya
Dr. James M. Gatauwa (PhD) - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
Global venture capital industry expansion has boosted entrepreneurship and innovation, leading to the generation of wealth and jobs in a number of countries. SMEs play a crucial role in socioeconomic development by promoting wealth generation, economic growth, and job creation in their individual economies. These SMEs nevertheless have uneven and restricted access to sustainable finance, which is essential to their survival and expansion, despite their prominence and importance in developing countries such as Kenya. This study aimed to examine how type of venture capital investment and venture capital control affect the financial growth of selected SMEs in Nairobi County, Kenya. Both a descriptive research design and quantitative research methods were applied. The target population for the analysis consisted of 139 SMEs that have received venture capital funding. Data was analyzed using descriptive and inferential statistics. Results indicated that type of venture capital investment had a positive and significant effect on SMEs’ financial growth. SMEs' financial growth was positively, but not significantly, impacted by venture capital control. The study concluded that venture capital control had a positive but insignificant effect on SMEs’ financial growth. The study recommended that entrepreneurs should consider a diverse syndicate of venture capitalists. This is key for improved risk management, survival rate, access to more strategic collaboration and attraction to resources and expertise. In addition, the study recommended that entrepreneurs should review the venture capitalists’ level of control in the business. This would help to mitigate negative impact resulting from venture capital-imposed restrictions on managerial autonomy.
