IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v4y2020i11p171-178.html
   My bibliography  Save this article

An appraisal of venture Capital financing on the growth and development of small and medium scale enterprises in Kumbotso Local government area of Kano State

Author

Listed:
  • Ummi Ibrahim Atah

    (Department of Economics, Saadatu Rimi College of Education Kumbotso, Kano State, Nigeria)

  • Safiyya Abubakar Abba

    (Department of Economics, Saadatu Rimi College of Education Kumbotso, Kano State, Nigeria)

Abstract

This study aims to appraise the role of venture capital (VC) financing on the growth and development of small and medium enterprises (SMEs) in Kano State. The SMEs growth and development in Nigeria is crippled due to lack of financing. The survival of SMEs requires not only financing from bank loans but other alternative sources. The advent of venture capital financing in Nigeria served as sustainable financing mechanisms to resuscitate SMEs’ performance. To achieve the research objectives, the study employs quantitative approach by distributing 50 questionnaires to the existing venture capital firms in Kano State. The simple random sampling technique was used to select 5 venture capitalist organizations in Kano State to participate in the study. The 50 questionnaires collected were analysed using descriptive statistics by using percentages and tabulation. Empirical findings demonstrated a substantial growth and development of SMEs through venture capital financing. The study also revealed that the operation of venture capital is successful, profitable and favoured SMEs in Kano State. Thus, entrepreneurs patronize and prefer venture capital financing than traditional banking loans. Therefore, it is recommended that proper policy framework should be developed to increase the number of venture capital firms in Nigeria. More so, awareness creation and provision of adequate fund are highly recommended.

Suggested Citation

  • Ummi Ibrahim Atah & Safiyya Abubakar Abba, 2020. "An appraisal of venture Capital financing on the growth and development of small and medium scale enterprises in Kumbotso Local government area of Kano State," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(11), pages 171-178, November.
    • Handle: RePEc:bcp:journl:v:4:y:2020:i:11:p:171-178
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-4-issue-11/171-178.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/virtual-library/papers/an-appraisal-of-venture-capital-financing-on-the-growth-and-development-of-small-and-medium-scale-enterprises-in-kumbotso-local-government-area-of-kano-state/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:aer:wpaper:16 is not listed on IDEAS
    2. Adebola Daramola, 2012. "New Technology-Based Firms and Venture Capital Policy in Nigeria," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 163-181.
    3. Sahlman, William A., 1990. "The structure and governance of venture-capital organizations," Journal of Financial Economics, Elsevier, vol. 27(2), pages 473-521, October.
    4. Steven N. Kaplan & Per Strömberg, 2003. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 281-315.
    5. Manju Puri & Rebecca Zarutskie, 2012. "On the Life Cycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms," Journal of Finance, American Finance Association, vol. 67(6), pages 2247-2293, December.
    6. Victoriya Salomon, 2016. "Emergent models of financial intermediation for innovative companies: from venture capital to crowdinvesting platforms in Switzerland," Venture Capital, Taylor & Francis Journals, vol. 18(1), pages 21-41, January.
    7. Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
    8. Isaac Oluwajoba Abereijo & Abimbola Oluwagbenga Fayomi, 2007. "The Attitude of Small and Medium Industrialists to Venture Capital Financing in Nigeria," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 1(1), pages 127-138.
    9. Stefano Bonini & Vincenzo Capizzi, 2019. "The role of venture capital in the emerging entrepreneurial finance ecosystem: future threats and opportunities," Venture Capital, Taylor & Francis Journals, vol. 21(2-3), pages 137-175, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tereza Tykvová, 2018. "Venture capital and private equity financing: an overview of recent literature and an agenda for future research," Journal of Business Economics, Springer, vol. 88(3), pages 325-362, May.
    2. Andrew Metrick & Ayako Yasuda, 2011. "Venture Capital and Other Private Equity: a Survey," European Financial Management, European Financial Management Association, vol. 17(4), pages 619-654, September.
    3. Rin, Marco Da & Hellmann, Thomas & Puri, Manju, 2013. "A Survey of Venture Capital Research," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 573-648, Elsevier.
    4. Nahata, Rajarishi, 2008. "Venture capital reputation and investment performance," Journal of Financial Economics, Elsevier, vol. 90(2), pages 127-151, November.
    5. Grilli, Luca & Murtinu, Samuele, 2014. "Government, venture capital and the growth of European high-tech entrepreneurial firms," Research Policy, Elsevier, vol. 43(9), pages 1523-1543.
    6. William R. Kerr & Ramana Nanda & Matthew Rhodes-Kropf, 2014. "Entrepreneurship as Experimentation," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 25-48, Summer.
    7. Andrieu, Guillaume & Groh, Alexander Peter, 2018. "Specialist versus generalist investors: Trading off support quality, investment horizon and control rights," European Economic Review, Elsevier, vol. 101(C), pages 459-478.
    8. Roberto Ragozzino & Dane P. Blevins, 2016. "Venture–Backed Firms: How Does Venture Capital Involvement Affect Their Likelihood of Going Public or Being Acquired?," Entrepreneurship Theory and Practice, , vol. 40(5), pages 991-1016, September.
    9. Bhanot, Karan & Kadapakkam, Palani-Rajan, 2022. "Pay for performance, partnership success, and the internal organization of venture capital firms," Journal of Corporate Finance, Elsevier, vol. 75(C).
    10. Cumming, Douglas J. & MacIntosh, Jeffrey G., 2003. "A cross-country comparison of full and partial venture capital exits," Journal of Banking & Finance, Elsevier, vol. 27(3), pages 511-548, March.
    11. L. Bottazzi & M. Da Rin & T. Hellmann, 2007. "The Importance of Trust for Investment: Evidence from Venture Capital," Working Papers 612, Dipartimento Scienze Economiche, Universita' di Bologna.
    12. Krohmer, Philipp & Lauterbach, Rainer & Calanog, Victor, 2009. "The bright and dark side of staging: Investment performance and the varying motivations of private equity firms," Journal of Banking & Finance, Elsevier, vol. 33(9), pages 1597-1609, September.
    13. Colombo, Massimo G. & D’Adda, Diego & Pirelli, Lorenzo H., 2016. "The participation of new technology-based firms in EU-funded R&D partnerships: The role of venture capital," Research Policy, Elsevier, vol. 45(2), pages 361-375.
    14. Fabio Bertoni & Annalisa Croce & Diego D'Adda, 2009. "Venture capital investments and patenting activity of high-tech start-ups: a micro-econometric firm-level analysis," Venture Capital, Taylor & Francis Journals, vol. 12(4), pages 307-326, November.
    15. Wang, Lanfang & Wang, Susheng, 2012. "Economic freedom and cross-border venture capital performance," Journal of Empirical Finance, Elsevier, vol. 19(1), pages 26-50.
    16. Bertoni, Fabio & Tykvová, Tereza, 2012. "Which form of venture capital is most supportive of innovation?," ZEW Discussion Papers 12-018, ZEW - Leibniz Centre for European Economic Research.
    17. Inci, Eren & Barlo, Mehmet, 2010. "Banks versus venture capital when the venture capitalist values private benefits of control," MPRA Paper 25566, University Library of Munich, Germany.
    18. Thomas Standaert & Sophie Manigart, 2018. "Government as fund-of-fund and VC fund sponsors: effect on employment in portfolio companies," Small Business Economics, Springer, vol. 50(2), pages 357-373, February.
    19. Espenlaub, Susanne & Khurshed, Arif & Mohamed, Abdulkadir, 2014. "Does cross-border syndication affect venture capital risk and return?," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 13-24.
    20. Christof Beuselinck & Marc Deloof & Sophie Manigart, 2008. "Private Equity Investments and Disclosure Policy," European Accounting Review, Taylor & Francis Journals, vol. 17(4), pages 607-639.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:4:y:2020:i:11:p:171-178. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.