| dc.description.abstract | Venture capital has been defined simply as risk capital, that is, the investment of funds in a business where there is a significant element of risk. This financing can thus be all equity or all debt or a combination of both, in addition to providing management support for the invested firms, normally referred to as 'investees'. An important part of any venture capital investment is the exit from the investment. Venture funds are meant to invest in a firm for an average of five years and reap from their investment. Venture capitalists can exit in various ways. In general, venture capitalists will exit their investments by one of the following five methods: an initial public offering (IPQ), an acquisition exit, a buyback, a secondary sale, or a write-off.
The research design involved the study of the population of the sixteen firms in Kenya involved in venture capital activities as members of the Africa Venture Capital Association. The response rate from these firms was at 31 % due to the high confidentiality in the industry. The results of the study were that the invested industry conditions and the management and performance of the investee firm were the most important factors, among others, in determining an exit mechanism. The data revealed that the few firms had made any exits as they have not been in existence long enough to go through a full cycle. The acquisition sale method for exit was picked as the most highly preferred method due to its likely high returns.
The paper recommends that government puts in place policy, legal and fiscal changes and incentives to aid in the development of the venture capital sector. Moves to avail more information, both by the government and the venture capitalists would help grow the sector in terms of investees and venture capital practitioners. Suggestions for further study in the area of venture capital were also made. | en_US |
