Venture capital is a form of investment in new small risky enterprises required to get them started by specialists called venture capitalists. Venture capitalists are investment specialists who raise pools of capital to fund new ventures which are likely to become public corporations in return for an ownership interest. Venture capitalists buy part of the stock of the company at a low price in anticipation that when the company goes public, they would sell the share at a higher price and therefore make a considerable profit.
• Lack of rich investors. This leads to inadequate equity capital.
• Inefficient stock market. This impairs the ability of the company to dispose of shares at a later date.
• Lack of managerial skills by the owners of the firm.
• Highly conservative approach by the venture capitalists.
Identify four factors that have limited the development of the venture capital market in your country.
