Risks in Venture Capital Financing in Ghana
Abstract:
It has been widely accepted that SME’s are the “engine of growth” of an economy. However, SME’s are plagued with funding gap which inhibits the growth expected. In gaining help, SME’s had sought financial support primarily from commercial banks who demand collateral and high interest rates that are not met by SME’s. Yet, SME’s fail to access venture capital financing as the appropriate option for business funding. This failure or inability to access venture capital financing is attributed to the fact that, the scheme is of high risk nature.
This study sought to identify the risks that are inherent in venture capital financing for appropriate responses to make the venture attractive. The study therefore used as respondents; Venture Capital Trust Fund (VCTF), two practicing organizations as the venture capitalists and 50 (fifty) SME’s selected from the Ghana Association of Industries, using effective sampling methods for suitable representation. Emphasis was made for effective campaign and education to promote venture capital financing in Ghana as recommendations.
