Browsing by Author "Joseph, Gebra Christopher"

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    Analysis of factors affecting accessibility of small enterprises to venture capital in Tanzania
    (University of Dar es Salaam, 2003) Joseph, Gebra Christopher
    Venture Capital firms (VCFs) provide funds to small growing private companies for initial development, start up, expansion and acquisitions of other companies to help them grow and succeed. The existence of relationship between VCFs and Small and Medium sized enterprises in Tanzania has influenced the importance of this study. The study examines the relationship between Small and Medium sized enterprise (SMEs) and Venture Capital Firms in Tanzania. First we analyzed the factors that influence SMEs decisions to use venture capital facilities (VC) and their perception on the actual benefits and costs to be gained from venture capital. Second, we analyzed the factors that influence VCA investment decisions and their role as means for long- term financing instrument to SMEs. Primary and secondary data were obtained from 90 respondents comprising venture capitalists and investees. On the basis of the reviewed literature and field survey works we developed the conceptual framework and hypotheses that were tested using a Chi square tests of independence to establish the significance of the effect of the factors influencing investees' top management's decisions to use VC. The same statistical tool was used to test the significance of the factors influencing VCAs' investment decisions. The study results show that there is no significant influence of VC auxiliary services to SMEs' management's decisions to use VC facilities other than other forms of finance. It also reveals that there is significant influence of the investment criteria to VCFs' decision to invest in SMEs. Further analysis of the above relations shows that the SMEs expectations on investment period exceed the exit period desired by the VCFs. Also the study identifies factors limiting accessibility of VC by SMES. Thus combined findings lead us to conclude that VCFs can provide a better and more efficient equity-finance to SMEs if they become proactive in provision of VC auxiliary services but through stage investment they accommodate SMEs long-term investment horizons. A number of SMEs made significant development when they received comprehensive venture capital facilities. The study raises a challenge for commercial banks, and other financial institutions as well as SMEs to how they can play an active role in VC industry. On the basis of recommendation VCF have to be more proactive on provision of auxiliary services, extend investment exit period and adopt a more comprehensive approach to evaluate investee management capability. We suggested further research activities on how VC finance affect the motivation to SMEs performance, relation between the levels of performance of VC backed and non backed SMEs and how well the VCF services fit as a segment to the whole financial sector and development of SMEs.