IMPACT OF VENTURE CAPITAL FINANCING ON SMALL AND MEDIUM SCALE ENTERPRISES
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IMPACT OF VENTURE CAPITAL FINANCING ON SMALL AND MEDIUM SCALE ENTERPRISES
ABSTRACT
The study examined the impact of venture capital financing on SMEs in the Uyo Local Government Area. Efforts by successive governments to boost the performance and growth of SMEs resulted in the implementation of several laws and acts, including the Venture Capital Fund to aid SMEs.
SMEs in Nigeria continue to confront liquidity and funding issues, resulting in company failures during production, industrial disputes, and, in some cases, regulatory closures.
In order to fulfil the study’s objectives, 50 questionnaires were distributed to Manager/SME owners in the Uyo Local Government area, with a focus on Elsa Foods Ltd, using convenience sampling.
Small and medium-sized enterprises (SMEs) typically seek self-financing and occasionally receive financial institution support. The data also reveal that SMEs continue to rely on a variety of finance methods, both during the conception and expansion stages.
However, the majority of SMEs were unaware or had limited understanding about Venture Capital funding as an alternative to funding. Firms who profited from Venture financial Financing indicated that they received not just financial inflows but also monitoring, technical skills and knowledge, access to management, marketing and distribution, and a reputation for attracting additional funding.
The report suggests that SMEs consider the potential benefits of pursuing equity financing from venture capital. Corporate investors might be encouraged to invest in venture capital through the efforts of venture capital fund managers.
In order to encourage the venture capital process, the government and policymakers should play a dual role of facilitator and educator. Following the observations and recommendations, more extensive research involving SMEs from other industries and states is strongly advised.
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