Obstacles to Venture Capital Funding: the South African Entrepreneurs’ Perspective

The primary objective of this qualitative study was to explore the challenges faced by entrepreneurs in acquiring funding from venture capitalist companies in South Africa. A purposive snowball sampling technique was adopted to collect data from ten entrepreneurs and ten venture capitalist companies using semi-structured face-to-face interviews. Thematic analysis of the data revealed a number of prominent themes. Findings indicated that venture capitalist investors consider personal qualities of the entrepreneur as a key indicator of a viable business opportunity when making investment decisions. It was further revealed that the investment evaluation process is both lengthy and costly. In South Africa, the economic and political environments are unstable and risky. This plays an influential role to venture capitalist investors when making investment decisions. The study contributes to the existing body of knowledge and points to issues that can be further investigated. The study also has managerial implications in that it provides guidelines to entrepreneurs on how to approach venture capitalist investors for investment. The study has some limitations in that the use of a non-probability sampling techniques implies that findings cannot be generalised widely. Furthermore, the study was conducted only in South Africa and findings therefore cannot be generalised across other markets.