Seed Capital and Performance: Reflections and Way Forward for Micro, Small and Medium Enterprises in Kenya
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Date
2023
Authors
Wangondu, Wanja
Muathe, Stephen M.A.
Journal Title
Journal ISSN
Volume Title
Publisher
IJRISS
Abstract
The study aimed at investigating the effect of seed capital on performance of micro, small and medium
enterprises by reviewing related extant conceptual, theoretical and extant empirical literature. The study
underpinning theories were; resource-based view, pecking order theory and theory of asymmetric
information. The study employed literature review methodology. Based on the review of empirical research,
it was concluded that seed capital contributes into developing a particular financing environment; where
MSMEs can obtain angel capital from angel investors as well as equity capital from shareholders and
crowdfunding, at the seed stage. More so, seed capital has an effect on performance of MSMEs supporting
studies that found a positive effect. The seed capital, MSME uses to start a business, commonly comes from
angel investors, owners’ equity and crowdfunding. The paper recommends that MSMEs; first, need to
obtain financing, obtain shared expertise and technical expertise from angel investors, should guarantee
complete control through use of equity capital to preserve control and independence as they provide for
reinvesting part of their profits.
Description
Article
Keywords
Angel Investors, Crowdfunding, Equity financing, Micro, small and medium-sized enterprises, seed capital
Citation
Wangondu, W., & Muathe, S. M. (2023). Seed Capital and Performance: Reflections and Way Forward for Micro, Small and Medium Enterprises in Kenya. International Journal of Research and Innovation in Social Science, 7(5), 275-283.