Constraints in the development of a venture capital market in Kenya.

  1. The few promoters of venture capital are risk averse and therefore are discouraged by the level of risk, the length of investment and the liquidity of investment.
  2. The nature of firms in Kenya is such that they are privately owned and therefore do not dilution of ownership through use of venture capital.
  3. The poor infrastructure in the country also discourages venture capitalists.
  4. They are not enough incentives for the development of venture capital and the government is discriminative against venture capital. The tax laws favour debt over equity.
  5. Lack of efficient capital markets also discourages venture capital development because there is no channeled for disinvestment i.e. selling off the venture interest once it has succeeded.
  6. There is a general shortage of venture capitalists.
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