EconPapers    
Economics at your fingertips  
 

Empirical examination of relationship between venture capital financing and profitability of portfolio companies in Uganda

Ahmed I. Kato () and Chiloane-Phetla E. Germinah ()
Additional contact information
Ahmed I. Kato: University of South Africa
Chiloane-Phetla E. Germinah: University of South Africa

Journal of Innovation and Entrepreneurship, 2022, vol. 11, issue 1, 1-18

Abstract: Abstract In recent times, venture capital (VC) financing has evolved as an alternative feasible funding model for young innovative companies. Existing studies focus on whether VC enhances profitability. While helpful, this body of work does not address a critical question: whether VC firms are more profitable than non-VC firms. The co-existence of both VC and non VC firms in Africa provides an opportunity to address this question. Accordingly, this paper sought to extend the understanding of the relationship between VC financing and the profitability of portfolio companies in Uganda, a rapidly growing VC market. We utilised a mixed methods approach, which involved quantitative data collected from 68 key VC stakeholders, and qualitative data collected from 16 semi-structured face-to-face interviews. The results confirm the superior performance of VC-financed enterprises when compared to non-VC-financed enterprises. The study makes a vital contribution by offering a diversified framework for enterprise success. The framework will assist VC firms in evaluating and customising funding programmes that can propel early-stage firms’ success in Uganda, and in similar emerging economies. Secondly, our results contribute to extant knowledge about recent developments in Uganda’s VC industry and how it influences the profitability trends of SMEs, also in similar emerging economies.

Keywords: Venture capital; Profitability and small and medium enterprises; Diversified-framework for enterprise success; Uganda (search for similar items in EconPapers)
JEL-codes: G2 G24 L26 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1186/s13731-022-00216-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joiaen:v:11:y:2022:i:1:d:10.1186_s13731-022-00216-5

Ordering information: This journal article can be ordered from
https://innovation-e ... ip.springeropen.com/

DOI: 10.1186/s13731-022-00216-5

Access Statistics for this article

Journal of Innovation and Entrepreneurship is currently edited by Elias G. Carayannis

More articles in Journal of Innovation and Entrepreneurship from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-05-12
Handle: RePEc:spr:joiaen:v:11:y:2022:i:1:d:10.1186_s13731-022-00216-5