Abstract:
Accessibility to finances by the Small and Medium Enterprise (SMEs) in Kenya has
been a major challenge. Venture Capital is one of the most convenient and secure
source of finance to SMEs yet its accessibility is the greatest challenge to most SMEs
in Kenya, therefore there is need to research on the determinants of accessibility to
venture capital by SMEs. The main objective of the study was to determine the factors
affecting accessibility to venture capital by SMEs in Kenya while the Specific
objectives of the study was to determine the effect of Information disclosure, SME
Owners awareness level, Quality of financial statements and Owners managerial
competence on accessibility to Venture Capital funds by SMEs. This study adopted an
explanatory design and the population of study comprised 11,753 SMEs registered
and operating in Nairobi CBD, which is located in Nairobi County. The study used
stratified random sampling technique to select 387 SMEs for the study and 387 five
point Likert scale structured questionnaires were distributed to the respondents out of
which 279 of them were collected which represented 72% response rate. Qualitative
method of data analysis was used in analyzing the questionnaires in order to establish
the relationship between the Independent variables and the Dependent Variable. Data
was analyzed using descriptive statistics which include means and standard deviation.
Inferential statistics which include Pearson correlation and multiple regressions were
also used to test hypotheses. The findings indicated information disclosure (β1 =
0.563, ρ=0.000<0.05), owners’ awareness level (β2 = 0.131, ρ=0.014<0.05), owners’
managerial competence (β3=0.129, ρ=0.005<0.05 and quality financial records (β4=
0.159, ρ<0.05) positively significantly affects access to venture capital. The study
thus, concluded that information disclosure, owners’ awareness level, owners’
managerial competence and quality financial records play a key role in enhancing
access to venture capital. There is need for SMEs to keep a record of financial
statements for future reference so that they can easily disclose them when required to.
Invoices and receipts also need to be filed. They need to have an understanding of the
risks and benefits of venture capital, attend trainings on business management and
finally to have a good record keeping so that they can easily make decisions with the
aid of the financial statements. This study has also provided the elements or qualities
that attract SMEs Venture Capitalists. Future research should attempt to gather
information from SMEs in other regions in Kenya to establish if the results of the
study hold.
