Examine the key factors that have curtailed the full development of the venture capital

markets in Kenya. (10 marks)

Student Number: 20s01aps001

Students Name: Wanyoike Sharon.

Venture capital are financial funds provided by investors to small business that have potential. This is
done by venture capitalist who come together pull their funds and invest in new small business that are
likely to became big corporations and in return they have part ownership of the organization. The main
of venture capitalist is to make profit so they therefore buy shares of the organizations at its low price
and they sell them at a hire price to make profit. The venture capitalist upon locating a potential
business they provide all the needed skill to make ensure the thriving of the business.

Examples include Pension funds, wealthy individuals

This however been caught by some challenges that has made it difficult for business to be funded.

Administration challenges.

Most of the business startup with no definite plan of how or who will run them. This in return leads
to poor management of every part of the business from assets of the business to profits. As a result the
business suffers more losses than profits and as a result the business has no potential of growing.

Lack of government support

Most of the governments have imposed policies that only favor organizations that have already
established themselves and in return the small business fade away. Some of this policies include taxes
where the big organizations are able to walk their way out of paying taxes and small organization pay
more to compensate the imperfect balance calculations.

Lack of entrepreneurial skills

A business plan should be the core when a business begins. When a business plan has no clear
guidelines of how to make profit or how to source skills it becames unfavorable for venture capitalist to
fund it.

Lack of rich investors

Funds may be limited due lack of investors who have and willing to invest in them. This in turn
leads to inadequate equity capital. Therefore there may be business that have potential but no money.

Infrastructural problem

Most of the small business have no rights when its comes to productions rights or raw material. This
in turn limits the growth of small industries.

REFERENCES

Masomo msingi publishers.