This paper empirically examined the relationship between Venture capital Financing and the profitability of portfolio companies in Uganda. Several empirical works paint an intriguing picture that VC financing is a reality in fostering economic growth of the early-stage enterprises
The paper embraced a mixed-method wherein quantitative data were collected from 68 key VC stakeholders and statistical data was analysed using a multiple regression model by generating the results from the SPSS. This was supplemented by 16 semi-structured face-to-face interviews. Qualitative data were transcribed and analysed using Altas-ti.
The key findings from this study suggest superior performance of VC-financed enterprises following VC financing when compared to non-VC financed enterprises. The VC-financed enterprises realised tremendous growth in terms of: Return on Equity - 42.3%; profitability - 30% - 50%; Return on Assets - 44.5%. In addition, 63% of the respondents confirmed a positive impact of government regulatory policy in enhancing the development of the early-stage firms. The higher the percentage of growth the better for the growth of the company.
This study may assist the policymakers and business fraternity to develop policy frameworks tailored to enhancing a vibrant venture capital market in Uganda.
This study makes a vital contribution to knowledge by offering a diversified framework for enterprise success, to benefit the VC stakeholders in customizing funding programs that can propel the early-stage enterprise success in Uganda and similar emerging economies.