Determinants of Venture Capital Financing among Micro-Agro Enterprises in Abia State, Nigeria

Abstract

The study analyzed the determinants of venture capital financing among micro-agroenterprises in Abia State, Nigeria. The specific objectives were to determine; the socioeconomic characteristics of the respondents, the financing needs of the respondents, the criteria for accessing venture capital financing among the respondents, and the factors influencing venture capital financing among the respondents. A simple random sampling technique was used in selecting 175 micro agroenterprises. Data were analyzed using simple descriptive statistics such as means, percentages, frequency distributions, and regression models. The study revealed that the majority of the respondents selected for the study were young ( =30 years), males (57%), single (61%), educated (91% had post-secondary school education), and were well experienced micro-agro enterprise operators ( =7 years). The study concluded that the high incidence of non-crop-based agro enterprises in the study could be due to the quick financial inflows and their less risky nature. Also, the financing needs were mainly the payment of rents ( = N 70,333.3), Business diversification ( = N 66,315.8), and the purchase of inputs ( = N 47, 066). In addition, the respondents indicated the ability to share portfolio (73%), 72% and 67% having a functional bank account (72%) and business plan (67%) were major criteria for accessing venture capital financing. Age, education, income, assets, and enterprise types were the variables affecting venture capital financing among the respondents. The study recommends that venture capitalists should support more young, educated, and experienced non-crop micro enterprises to ensure their financial investment is realized on time. Moreover, venture capitalists should fund micro-agro enterprises with major input requirements. Finally, venture capitalists should support micro-based enterprises with the capacity to generate continuous cash inflows.