Jones, Morgan and Mlambo, Chipo (2009): Early-stage venture capital in South Africa: Challenges and prospects.
Download (843kB) | Preview
The aim of this paper is to assess which factors impact the development of early-stage venture capital in South Africa. Factors identified for other markets and countries are explored and their relative importance in South Africa determined from the perspective of market participants. These include venture capital and private equity fund managers, government institutions, intermediaries and university research coordinators. The study used both an online survey, to capture a broad representation of opinion, and interviews, for in-depth responses. There was broad consensus among respondents with regards to the key factors requiring attention, which include the lack of funds targeted at early-stage investments, the lack of specialised fund managers, and the low entrepreneurial skillsets in the country. Through a detailed analysis of the responses, certain measures are proposed that can enhance the development of early-stage venture capital in South Africa such as engaging more with angel investors and improving the cooperation between the different market players in the sector.
|Item Type:||MPRA Paper|
|Original Title:||Early-stage venture capital in South Africa: Challenges and prospects|
|Keywords:||early-stage; venture capital; entrepreneurship; investment; South Africa|
|Subjects:||N - Economic History > N2 - Financial Markets and Institutions > N27 - Africa; Oceania
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - Entrepreneurship
M - Business Administration and Business Economics; Marketing; Accounting > M1 - Business Administration > M13 - New Firms; Startups
G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
|Depositing User:||C Mlambo|
|Date Deposited:||28. Nov 2012 15:58|
|Last Modified:||12. Feb 2013 10:33|
Aberman, J. 2009. The decline of the United States venture capital industry: what the federal government should do about it. Washington, D.C.: Amplifier Ventures.
Abrahamson, M. 1983. Social Research Methods. Englewood Cliffs, NJ: Prentice Hall.
Avnimelech, G. & Teubal, M. 2004. ‘Venture capital start-up co-evolution and the emergence & development of Israel's new high tech cluster’, Economics of Innovation & New Technology, 13(1): 33-60.
Banerjee, A. 2008. ‘Private equity in developing nations’, Journal of Asset Management, 9(2): 158-170.
Becker, R. & Hellman, T. 2003. ‘The genesis of venture capital: Lessons from the German experience’, CESifo Working Paper No. 883, Sauder School of Business.
Black, B. & Gilson, R. 1998. ‘Venture capital and the structure of capital markets: banks versus stock markets’, Journal of Financial Economics, 47(3): 243-277.
Bliss, R. 1999. ‘A venture capital model for transitioning economies: the case of Poland’, Venture Capital: An International Journal of Entrepreneurial Finance, 1(3): 241-257.
Bottazzi, L. & Da Rin, M. 2002. ‘Venture capital in Europe and the financing of innovative companies’, Economic Policy, 17(34): 229-270.
Cumming, D. & Fleming, G. 2002. ‘A law and finance analysis of venture capital exits in emerging markets’, Working Paper Series in Finance 02-03, The Australian National University: Canberra.
Da Rin, M., Nicodana, G. & Sembenelli, A. 2006. ‘Public policy and the creation of active venture capital markets’, Journal of Public Economics, 90(8-9): 1699-1723.
Dossani, R. & Kenney, M., 2002. ‘Creating an environment for venture capital in India’, World Development, 30(2): 227-253.
Easterby-Smith, M., Thorpe, R. & Lowe, A. 1991. Management Research: An Introduction. London: SAGE Publications Ltd.
Engelbracht, C. 2009. ‘Give angel investors tax relief to plug fund gap of start-ups’, Business Report, November 26, 2009.
Farag, H., Hommel, U., Witt, P. & Wright, M. 2004. ‘Contracting, monitoring, and exiting venture investments in transitioning economies: A comparative analysis of Eastern European and German markets’, Venture Capital: An International Journal of Entrepreneurial Finance, 6(4): 257-282.
Gilson, R. 2003. ‘Engineering a venture capital market: lessons from the American experience’, Stanford Law Review, 55(4): 1067-1103.
Gompers, P., 1994. ‘The rise and fall of venture capital’, Business and Economic History, 3(2): 1-26.
Gompers, P. 1995. ‘Optimal investment, monitoring, and the staging of venture capital’, The Journal of Finance, 50(5): 1461-1489.
Gompers, P. & Lerner, J. 1999. The Venture Capital Cycle. 2nd Edition. Cambridge, Massachussetts: MIT Press.
Jeng, L. & Wells, P. 2000. ‘The determinants of venture capital funding: evidence across countries’, Journal of Corporate Finance, 6(3): 241-289.
Kaplan, S. & Stromberg, P. 2004. ‘Characteristics, contracts and actions: evidence from venture capitalist analyses’, The Journal of Finance, 59(5): 2177-2210.
Karsai, J., Wright, M. & Filatotchev, I. 1997. Venture capital in transition economies: the case of Hungary, Entrepreneurship Theory and Practice, 21(4): 93-110.
Kenney, M., Han, K. & Tanaka, S. 2002. ‘Scattering geese: the venture capital industries of East Asia’, A Report to the World Bank. BRIE Working Paper 146. Berkeley, California. [Online] URL: http://brie.berkeley.edu/publications/wp146.pdf
Kenney, M. & von Burg, U. 1999. ‘Technology and path dependence: the divergence between Silicon Valley and route 128’, Industrial and Corporate Change, 8(1): 67-103.
KPMG & SAVCA. 2009. Venture capital and private equity industry performance survey of South Africa covering the 2008 calender year. Johannesburg: KPMG Services.
Lerner, J., Moore, D. & Shepherd, S. 2005. ‘A study of New Zealand's venture capital market and implications for public policy’, A report to the Ministry of Research, Science and Technology, New Zealand.
Lingelbach, D., Murray, G. & Gilbert, E. 2009. The rise and fall of South African venture capital: A coproduction perspective. [Online] URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1459175
Megginson, W. 2004. ‘Towards a global model of venture capital?’ Journal of Applied Corporate Finance, 16(1): 8-26.
Sahlman, W. 1990. ‘The structure and governance of venture-capital organizations’, Journal of Financial Economics, 27(2): 473-521.
SAVCA, 2008. Venture capital at an inflection point? Johannesburg: SAVCA.
Stillman, R., Sunderland, J., Heyl, L. & Swart, H. 1999. A venture capital programme for South Africa: study and recommendations, Working paper, Arlington, Virginia: Nathan Associates.
Van Deventer, B. & Mlambo, C., 2009. ‘Factors influencing venture capitalists' project financing decisions in South Africa’, South African Journal of Business Management, 40(1): 33-41.