- 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.
- 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.
- The poor infrastructure in the country also discourages venture capitalists.
- 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.
- 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.
- There is a general shortage of venture capitalists.
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