Effect Of The Stages Of Venture Capital Financing On The Performance Of Top One Hundred Mid sized Companies In Kenya

Abstract

Midsized companies in Kenya remain financially constrained due to lack of working capital and funds for expansion, thus, such businesses do not provide the much hyped role of job creation, contribution to Gross Domestic Product (GDP) and above all contribution to social economic development. This study examined the effect of venture capital financing on the performance of top one hundred midsized companies in Kenya. The specific objectives entailed determining the effect of early stage financing, expansion financing and effect of acquisition financing on the performance of top one hundred midsized companies. The study adopted descriptive research design with the target population being the top 100 midsized companies in Nairobi. The data was collected using questionnaire and analyzed using descriptive statistics and multiple regression analysis. This study found that there is a significant positive relationship between earlystage financing, expansion-stage financing, acquisition-stage financing and performance of Mid-Sized Companies in Kenya. The researcher recommends that, firms should focus their capital structure on end results as defined by growth. The order of preference reflected the relative costs of various financing options. Firms therefore should first use internal sources of finance as compared to expensive or costly external finance and that firms that are profitable and generate higher earnings are expected to use less debt than those that do not generate high earnings.