Accessing venture capital: assessing the legal and regulatory framework for the growth of the venture capital industry in Kenya

Abstract

Small and Medium Enterprises in Kenya have been variously reported to suffer lack of financial resources for growth and sustainability, especially because debt financing is generally expensive. Venture capital has had a significant impact on Small and Medium Enterprises in the developed countries. It is an important alternative financing for small scale enterprises yearning to grow. Studies have shown that enterprises backed by venture capital are confirmed as key drivers of growth and sustainable development. This paper sought to assess whether the legal and regulatory framework for venture capital in Kenya was adequate to foster economic development by doing a comparative review of the legal and regulatory framework supporting venture capital in other jurisdictions with best practices; and to further make recommendations for the reform of the venture capital industry in Kenya. The preliminary results of the study revealed the challenges to the growth of the venture capital sector. The findings however responded positively to the research question of whether policy directions and the legal and regulatory environment were hindering or stifling the growth and development of venture capital companies in Kenya. The principal conclusion was that the current legal and regulatory framework is neither sufficient nor adequate to foster its growth. Finally, findings from this thesis would contribute to the venture capital industry academically