Venture Capital Financing And Performance Of Small And Medium Enterprises

Venture Capital Financing And Performance Of Small And Medium Enterprises

Abstract

The study adventure capital backing and performance of small and medium enterprises in Akwa Ibom aimed at chancing the relationship between adventure capital backing and performance of small and medium enterprises in Akwa Ibom State other objects of the study includes; to estimate the benefit of adventure capital to SMEs performance, to estimate the position of adventure capital accruing to SMEs in akwa ibom state, to estimate the performance of SMEs in the time 2001- 2015, to determine the relationship between adventure capital and SMEs performance, the study made use of the data attained from the CBN statistical bulletin 2016. Ordinary least square retrogression was used to test the thesis. The study set up out that there’s significant relationship between adventure capital backing and performance of small and medium enterprises in Akwa Ibom State. The performance of SMEs was the same for the time 1999 and 2014. SMEs endured the loftiest performance in the 2012 with a performance rate of98.9. The study also concluded that there’s a statistically significantly strong positive relationship between adventure capital backing and the performance of small and medium scale enterprises in Uyo, Akwa Ibom state. Proper recommendation were made to enhance the interest of experimenters for farther study of adventure capital backing and the performance of small and medium scale enterprises in Uyo, Akwa Ibom State.

Chapter One

Preface

Background To The Study

Governments throughout the world are currently turning their attention to small- scale enterprises. This is because attempts to promote profitable progress by establishing large diligence have generally failed to ameliorate the lives of the maturity of the populations concerned( White Paper on International Development, 2000). thus, Small and Medium Enterprises( SMEs) are now viewed as important in indeed and indifferent profitable development.

RoK( 2005) easily show that the sector isn’t only a provider of goods and services but also a motorist in promoting competition, invention and enhancing the enterprise culture which is necessary for private sector development and industrialization. The sector should effectively respond to challenges of creating productive and sustainable employment openings, promoting profitable growth and poverty eradication in the country.

SMEs will play a significant part in contributing to the public thing of wealth creation and making Nigeria an bucolic country( Liedholm 1998). Lack of access to credit is a major constraint inhibiting the growth of SMEs sector. The issues and problems limiting SMEs accession of fiscal services include lack of palpable security coupled with unhappy legal and nonsupervisory frame that doesn’t fete innovative strategies for advancing to SMEs. Limited access to formal finance due to poor and inadequate capacity to deliver fiscal services to SMEs continues to be a constraint in the growth and expansion of the sector. Formal fiscal institutions perceive SMEs as high threat and commercially unviable As a result only a many SMEs access credit from formal fiscal institutions in the country. colorful types of backing have been handed to SMEs to boost their growth and development by making them more profitable( Institute of Economic Affairs & Society for Economic Development( IEA/ SED, 2001). Several Associations including business associations, voluntary associations and other nongovernmental associations have set up programs to enhance the factors that impact development of SME especially as it relates to enterprise growth and development.

The types of backing offered by these associations vary with some giving fiscal backing, others training and extension services,pre-constructed marketable tones or aiding in marketing of products( Admati, & Pfleiderer( 1994). Despite the large number of backing programs, the growth and development of SME has not been satisfactory. gambles have collapsed as soon as aiding associations pull out of the design, and remaining bones have remained small. According to the study accepted by Hallberg( 1998) and Mead and Liedholm( 1998), access to finance is an important component to development. Financial constraints are likely to affect business creation and enhancement.

Venture Capital is one source ofnon-bank backing, which is relatively current in advanced fiscal requests for small or start up enterprises( Keuschnigg 1998). Venture plutocrats are organized providers of backing for winning but parlous business proffers by small and medium enterprises that have a promising but as yet unprovenidea.However, they will take an power stake in the business, If the Venture plutocrats are induced that a business idea is promising. It’s anticipated that country’s small businesses whose growth has been constrained by deficit of capital or increased cost of borrowing will have another source of finance.

There’s empirical substantiation of the goods of adventure capital backing in the industrialization of developed countries. In the United States of America, the part of Venture Capital backing has been necessary throughout its industrialization; still it came institutionalized after the 2nd World War. Before World War II, adventure investment was a monopoly led by fat individualities, investment banking syndicates and many family associations with a professional director( Hisrich and Peters, 2002). For illustration, over the times, the Rockefeller family has made the original capital donation to a number of successful businesses.

Statement Of The Problem

Small and medium, enterprises in Nigeria have difficulties in growth due to lack of finance. They hardly grow beyond launch-up stage. Others go out of business at a veritably early stage. The study accepted by Hallberg( 1998), and Mead & Liedholm( 1998) reveals that access to finance is an important component to development of SME. They’ve many druthers of penetrating finance other than counting on their retained earnings to finance their investments. Notwithstanding the fiscal difficulties faced by SME presently in Nigeria, indispensable sources of finances have to be sought to sustain this important sector. Adventure capital backing, which is relatively current in advanced countries, has played a big part in enhancing growth of SMEs by furnishing equity capital. In countries where adventure capital backing has been practice, it has brought tremendous enhancement to the small and medium enterprises. The experimenter feels that it’s important to examine the relationship between adventure capital backing and performance of small and medium enterprises in Nigeria considering the poor position of development endured in the sector in the country.

Objects Of The Study

The following are the objects of this study

To estimate the benefit of adventure capital to SMEs performance

To estimate the position of adventure capital accruing to SMEs in akwa ibom state.

To estimate the performance of SMEs in the time 2001- 2015

To determine the relationship between adventure capital and SMEs performance

Exploration Questions

What are the benefits of adventure capital to SMEs performance?

To what position is venture capital accruing to SMEs in akwa ibom state?

What’s the position of performance of SMEs in the time 2001- 2015?

Is there any relationship between adventure capital and SMEs performance in akwa ibom state 2001- 2015?

thesis

The study came up the thesis as stated below in order to evoke information on the performance of SMEs and adventure capital backing. The specific thesis is stated below as follows

HO there’s no significant relationship between adventure capital backing and performance of small and medium enterprises in Akwa Ibom State.

HA there’s significant relationship between adventure capital backing and performance of small and medium enterprises in Akwa Ibom State.

Significance Of The Study

The following are the significance of this study

Findings of this study will be useful for business possessors and operation of business the benefit accruable from adventure capital backing with emphasis on its relationship with a new businesses.

This exploration will be a donation to the body of literature in the area of adventure capital backing and performance of small and medium enterprises, thereby constituting the empirical literature for unborn exploration in the subject area.

Compass/ Limitations Of The Study

This study will be limited to small and medium businesses in Akwa Ibom State that has advantaged from adventure capital backing.

Limitation Of Study

fiscal constraint-inadequate fund tends to stymie the effectiveness of the experimenter in sourcing for the applicable accoutrements , literature or information and in the process of data collection.

Time constraint- The experimenter will contemporaneously engage in this study with other academic work. This accordingly will cut down on the time devoted for the exploration work.