This study focuses on 2006-2016 and aims at assessing the contribution of the venture capital trust fund on the operation of the beneficiary SMEs in the area of financial management, corporate governance, profitability and market shares. Using purposive sampling method, all the 27 SMEs benefiting from the Venture Capital Trust Fund were interviewed to appreciate the issues surrounding the use of venture capital for effective recommendation. The agro processing, real estate, health care and hospitality sector administered 11,11% each of the questionnaires, the education sector administered the highest questionnaires representing 22,22%,pharmaceutical manufacturing, manufacturing and financial sector administered 7,41%, Beverage Manufacturing and Industrial Consumables & Services administered 3,70% each.
SMEs are the bane of every country especially Ghana. They are major contributor to employment, wealth creation, poverty reduction, taxation, Gross Domestic Product, foreign exchange earnings and development and innovation of new business ideas. However, SMEs are saddled with financial constraints, poor corporate governance and financial management, limited market share and encounter losses in business operation. The SMEs also lacks collateral securities to acquire loan from financial institutions to employ the needed human resource and equipment for startup capital and growth. Those that had the collateral securities and acquire the loans are faced with high interest rate which increased their cost of business hence low return for expansion.
Table of Contents
1. INTRODUCTION
2. VENTURE CAPITAL AS DEVELOPMENT ACCELERATION, INCREASE OF MARKET SHARE AND COMPANY'S PROFITABILITY
2.1 Venture Capital
2.1.1 Definition of Venture Capital
2.1.2 Characteristics of Venture Capital Concept
2.1.3 What Venture Capital Expect
2.1.4 The Venture Capital Investment
2.1.5 Financing Stage of Venture Capital
2.1.5.1 Venture Capital versus Private Equity
2.1.5.2 Type of Investee Firm
2.1.5.3 Use of Proceeds by Investee Firms
2.1.5.4 Type of Risk
2.1.6 Venture Capital Funding
2.1.6.1 Clear-Cut Policy and Regulatory Framework
2.1.7 History of Venture Capital
2.1.8 Growth of Venture Capital
2.1.8.1 Venture Capital in Europe
2.1.8.2 Venture Capital in Africa
2.1.8.3 Venture Capital in Ghana
2.1.9 Summary
2.3 Definition and Overview of SMEs in Ghana
2.3.1 Financing Constraints of Large and SMEs
2.4 Definition of Market Share
2.4.1 Market Change Position
2.4.2 Behavioral Difference between High and Low Market Share Companies
2.4.3 Limitation of Market Share Concepts
2.4 Profitability in Business
2.4.1 Measure of Profitability
2.5 Relationship between Market Share and Profitability in Business
2.5.1 Influence of Venture Capital on Financial Management of SMEs
2.7 Methodology
2.7.1 Research Design
2.7.2 Sources of Data
2.7.3 Study Population
2.7.4 Sample Technique
2.7.5 Survey Instrument
2.8 Analysis of Data
2.8.1 Venture Capital Trust Fund
2.9 Data Analysis and Results Discussion
2.9.1 Profile of SMEs
2.9.1.1 SMEs Ownership
2.9.1.2 Board Composition
2.9.1.3 Sectorial Distribution of SMEs Surveyed
2.9.1.4 Human Resource Strength
2.9.1.5 Age of Existence
2.9.1.6 Location of SMEs and Sectorial Cross Tabulation
2.9.2 Stage/Reason for Applying for Venture Capital
2.9.3 Contribution of Venture Capital to Growth
2.9.3.1 Sales Before and After the use of Venture Capital
2.9.3.2 Profit/Loss Before and After the use of Venture Capital
2.9.3.3 ANOVA Test
2.9.3.4 Value of Net Asset Before and After the use of Venture Capital
2.9.4 Contribution of Venture Capital to Financial Management of SMEs
2.9.4.1 Budget Preparation Before and After the use of Venture Capital
2.9.4.2 Cash Planning Before and After the use of Venture Capital
2.9.4.3 Debt Management Before and After the use of Venture Capital
2.9.4.4 Inventory Control Before and After the use of Venture Capital
2.9.4.5 Interest on Loan
2.9.4.6 Exit Strategy
3. CONCLUSION
Research Objectives and Core Themes
The primary objective of this dissertation is to evaluate the awareness and contribution of Venture Capital Financing to the financial management, growth, market share, and profitability of Small and Medium Scale Enterprises (SMEs) in Ghana, specifically examining the impact of the Venture Capital Trust Fund.
- Impact of Venture Capital on the financial management practices of SMEs.
- Relationship between Venture Capital investment and SME growth.
- Influence of Venture Capital on corporate governance structures within beneficiary firms.
- Correlation between Venture Capital support and improvements in market share and profitability.
Excerpt from the Book
1. INTRODUCTION
The focus of this study is to evaluate the awareness of Venture Capital Financing scheme within the SME community in the Ghana. According to Abor and Biekpe (2006), there is limited access to financial resources available to smaller organizations as compared to their larger counterparts which have occasioned their low growth and development. They posited that, this twigs from the reasoned that SMEs have limited access to the capital market partly due to the perception of higher risk, informational barriers, and the higher cost of intermediation for smaller organizations. Again ILO (2005) indicated that, starting a business is a risky venture and warns that the chances of small businesses making it past five year mark are very slim. It is based on these finding that has influenced the researcher to examine the role that venture capital financing could have on growth and development of SMEs.
The general objectives of this study are:
I. to assess the contribution of venture capital on financial management of the SMEs;
II. To appreciate the relationship between venture capital finance on growth of SMEs;
III. To approve whether venture capital finance impact on the governance of the SMEs;
IV. To examine the correlation between support from Venture Capital Firms and SMEs market share and profitability.
Small and Medium Scale Enterprises (SMEs) are the pivot around which the success of every country revolves. They contribute immensely to the Gross Domestic Product (GDP), Tax, employment, inflation reduction, economic stability and poverty alleviation. The SMEs are stepping stone to industrialization and spine to national economies in the work and represent about 80% of the world economy (Asian Development Bank Report, 2013). This calls for efficient and sustainable SMEs in the world especially Ghana. However, these SMEs are challenged with the sector. The enactment of small Business Investment Act of 1958 in the USA to assist small businesses realizes and contributes its firm.
Summary of Chapters
1. INTRODUCTION: Outlines the research focus on Venture Capital financing for SMEs in Ghana, defining the problem of limited financial access and stating the study objectives.
2. VENTURE CAPITAL AS DEVELOPMENT ACCELERATION, INCREASE OF MARKET SHARE AND COMPANY'S PROFITABILITY: Provides a comprehensive literature review on the theoretical concepts, history, and growth of venture capital, as well as the definitions of market share and profitability in the SME context.
3. CONCLUSION: Synthesizes the empirical findings, confirming that venture capital significantly improves financial management, profitability, and growth for SMEs in Ghana while offering policy recommendations.
Keywords
Asset Turnover, Average Profit, Average Sales, Corporate Governance, Financial Management, Ghana, Market Share, Profitability, Return on Asset, Small and Medium Scale Enterprises, Venture Capital
Frequently Asked Questions
What is the core focus of this dissertation?
The study evaluates the impact and contribution of Venture Capital financing on the performance, financial management, and growth of SMEs in Ghana.
What are the primary themes discussed in the work?
Key themes include Venture Capital theory, financial management of SMEs, SME growth indicators, corporate governance, market share dynamics, and the role of the Venture Capital Trust Fund.
What is the main objective or research question?
The research aims to assess how venture capital influences the financial management, growth, governance, and market profitability of SMEs, specifically in the Ghanaian context.
Which scientific methodology is applied?
The research employs a case study approach with a purposive sampling method, gathering primary data from 27 beneficiary SMEs through structured and unstructured questionnaires, alongside secondary data analysis.
What is covered in the main body of the work?
The main body includes an extensive literature review on venture capital concepts and market share, followed by a detailed data analysis and discussion regarding SME performance before and after venture capital intervention.
Which keywords characterize this research?
The research is characterized by terms such as Venture Capital, SMEs, Financial Management, Profitability, Market Share, Corporate Governance, and Ghana.
How does the author define the "missing middle" in the context of African SMEs?
The author references the scarcity of small and medium-scale enterprises operating alongside micro-enterprises and a few large firms, a structural gap known in development literature as the "missing middle."
What findings did the research report regarding budget preparation in SMEs?
The study found that after the intervention of venture capital, 100% of the surveyed SMEs engaged in formal budget preparation, significantly improving their financial discipline compared to the period before receiving venture capital.
- Quote paper
- Gladstone Stanley (Author), 2018, Venture capital as a form of development acceleration and increase of market share and company’s profitability in Ghana, Munich, GRIN Verlag, https://www.grin.com/document/461955
