Obstacles to Venture Capital Funding: the South African entrepreneurs’ perspective
Keywords:
Venture Capital, South Africa, EntrepreneurshipAbstract
The primary objective of this qualitative study was to explore the challenges faced by entrepreneurs to acquire funding from venture capitalist companies in South Africa. Purposive snowball sampling techniques were adopted to collect data from ten entrepreneurs and ten venture capitalist companies using semi-structured face-to-face interviews. Thematic analysis of the data revealed a number of prominent themes/findings. These findings discovered that venture capitalist investors consider personal qualities of the entrepreneur as a key indicator of a viable business opportunity when making investment decisions. It was further revealed that the investment evaluation process is both lengthy and costly. In South Africa, the economic and political environments are unstable and risky. This plays an influential role to venture capitalist investors when making investment decisions. The study contributes to the existing body of knowledge and points to issues that can be further investigated. The study also has managerial implications in that it provides guidelines to entrepreneurs on how approach venture capitalist investors for investment. The study has some limitations. The use of a non-probability sampling techniques implies that findings cannot be generalised widely. Furthermore, the study was conducted in South Africa and therefore findings cannot be generalised across other markets.
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