the historical background of venture capital fund

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CHAPTER 1

INTRODUCTION

1.0. INTRODUCTION

This chapter presents the historical background of Venture Capital Funds together

with the objectives of this particular term paper. Furthermore this chapter shows how

the study was conducted.

1.1. THE HISTORICAL BACKGROUND OF VENTURE CAPITAL FUND

The concept of venture capital fund started to come into existence in the 1 st half of the

20th century specifically the late 1930’s in the United States of America (USA).

During this time it was known as Development capital. During this era there were a

few families in USA which had accumulated substantial amounts of wealth and used

this wealth to invest in growing companies by providing them with funds to finance

these growing businesses. The good examples of these families which have a lot of

fame up to date are The Rockefellers, The Vanderbilts and The Whitneys. In 1938,

Lawrence Rockefeller helped to finance the creation of two companies namely,

Eastern Airlines Co and Douglas Aircraft Co. The Rockefeller family had a lot of vast

holdings in various companies in USA.

Eric M Warburg, founded his own company known as E.M Warburg & Co in 1938,

but he faced the challenge of expanding the company. So he invited investors who

invested in the form of leveraged buy outs and venture capital, and the company’s

name was ultimately modified to Warburg Pincus Co.

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The origin of the modern private equity or venture capital

Before the Second World War (WWII), venture capital was known as Development

capital. These development capitals were originated from the wealth families and

individuals. It was not until WWII that venture capital is considered today to be the

true private equity. Due to this improvement, Investors started to emerge all over

USA which marked the founding of the first two (2) Venture Capital Firms which

were, American Research and Development Corporation (ARDC) which was founded

by Georges Donot “the Father of Venture Capital” together with Ralph Flanders and

Karl Compton who altogether encouraged people with funds to invest in private sector

companies which were managed by soldiers who have returned from The Second

World War (WWII). The second Venture capital Firm to be formed during this era

was J.H Whitney & Co.

ARDC’s significance was that primarily it was the first Institutional Private Equity

Investment Firm that raised capital from sources other than wealthy families although

it had several notable successes as well. Furthermore ARDC has a reputation of being

the first venture capital firm to show success in 1957. This was due to the fact that its’

$70,000 investment in Digital Equipment Corporation (DEC) was valued over $355

million after company’s Initial Public Offer (IPO) in 1968. This investment had a

return of 1,200 times its Initial Investment of $70,000 though its expected annual rate

of return was 101%.

Venture capital in the 1980s

The public successes of the venture capital industry in the 1970s and early 1980s

(e.g., Digital Equipment Corporation, Apple Inc.) gave rise to a major rise of venture

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http://en.wikipedia.org/wiki/Digital_Equipment_Corporation

http://en.wikipedia.org/wiki/Apple_Inc.

http://en.wikipedia.org/wiki/Digital_Equipment_Corporation

http://en.wikipedia.org/wiki/Apple_Inc.



capital investment firms. From just a few dozen firms at the start of the decade, there

were over 650 firms by the end of the 1980s, each searching for the next major "home

run". While the number of firms multiplied, the capital managed by these firms

increased by only 11% from $28 billion to $31 billion over the course of the decade.

The growth of the industry was hindered by drastic declining returns that led certain

venture firms begin experiencing losses for the first time. In addition to the increased

competition among firms, several other factors impacted returns. The market for

initial public offerings dropped in the mid-1980s before collapsing after the stock

market crash in 1987 and foreign corporations, particularly from Japan and Korea,

flooded early stage companies with capital.

In response to the changing conditions, corporations that had sponsored domestic

venture investment firms, including General Electric and Paine Webber either sold off

or closed these venture capital units. Furthermore, venture capital units within

Chemical Bank and Continental Illinois National Bank , and many others, began

shifting their focus from funding early stage companies toward investing in more

mature companies. Even The founders of Venture Capital Funding, J.H. Whitney &

Company and Warburg Pincus began to transition towards leveraged buyouts and

growth capital investments.

The venture capital boom and the Internet Bubble (1995 to 2000)

By the end of the 1980s, venture capital returns were relatively low, particularly in

comparison with the emerging leveraged buyout methods; this was due to the reasons

including the increased competition for hot startups, excess supply of Initial Public

Offerings (IPO) and the inexperience of many venture capital fund managers. Growth

in the venture capital industry remained limited throughout the 1980s and the first half

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http://en.wikipedia.org/wiki/General_Electric

http://en.wikipedia.org/wiki/Paine_Webber

http://en.wikipedia.org/wiki/Chemical_Banking

http://en.wikipedia.org/wiki/Continental_Illinois_National_Bank_and_Trust_Company

http://en.wikipedia.org/wiki/J.H._Whitney_%26_Company


http://en.wikipedia.org/wiki/Warburg_Pincus

http://en.wikipedia.org/wiki/Leveraged_buyout

http://en.wikipedia.org/wiki/Growth_capital


http://en.wikipedia.org/wiki/General_Electric

http://en.wikipedia.org/wiki/Paine_Webber

http://en.wikipedia.org/wiki/Chemical_Banking

http://en.wikipedia.org/wiki/Continental_Illinois_National_Bank_and_Trust_Company



http://en.wikipedia.org/wiki/Warburg_Pincus


http://en.wikipedia.org/wiki/Growth_capital




of the 1990s increasing from $3 billion in 1983 to just over $4 billion more than a

decade later in 1994 which is relatively low.

After a “wake up call” of venture capital managers, the more successful firms

retrenched employees, and turned their focus on improving operations at their

portfolio companies rather than continuously making new investments. The results

began to turn very attractive, successful and would ultimately generate the venture

capital boom of the 1990s. Former Wharton Professor Andrew Metrick referred to

these first 15 years of the modern venture capital industry beginning in 1980 as the

"pre-boom period" in anticipation of the boom that would begin in 1995 and last

through the bursting of the Internet bubble in 2000.

Venture Capital funds in Africa

African continent has been recognized as on of the continents which lack long term

funding. It has come into knowledge that most of the African private businesses are

traditionally run by short term loans from commercial banks. But since the beginning

of the 21st century, private equity or venture capital funding has gained prominence in

most African emerging economies like that of Tanzania.

The conducted surveys in 2006 and 2007 in Africa show that the venture funds have

raised over 2 billion USD which are invested across different investments in the

continent. Economists anticipate that Africa has still a lot of opportunities for

investments and that many resources are still untapped.

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http://en.wikipedia.org/wiki/Internet_bubble

http://en.wikipedia.org/wiki/Internet_bubble



1.2. THE OBJECTIVES OF THE TERM PAPER

To evaluate the importance of using Venture Capital Funds in financing the

businesses.

To assess the factors limiting the use of Venture Capital funds in Tanzania.

To suggest possible ways to improve Venture Capital Funding in Tanzania.

1.3. THE SCOPE OF THE STUDY

This study was conducted at TANCOL Energy Ltd at its headquarters in Dar es

salaam. This is among the companies in Tanzania which uses Venture Capital Funds

to finance its projects. However the results can be inferred to other companies that

operate by using Venture Capital funds in Tanzania.

1.4. THE RATIONALE OF THE STUDY

This study can help to enlighten people in Tanzania about the issue of Venture Capital

Financing. Most of the people know about 2 common financing methods used by

companies which are borrowing from financial institutions and issuing shares at the

Capital market. But most people are not so much aware on nature of Venture Capital

funds for instance how to establish a venture Capital Fund Firm.

So by using this study, people with different excellent business ideas in Tanzania but

lack funds to finance their businesses can be able to learn how to raise funds from

private sources rather than borrowing which involves complications like possession of

collaterals. The development of many firms dealing with pharmaceuticals and other

important scientific discoveries in The United States of America came as a result of

Venture Capital Funds from Private institutions or people.

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1.5. HOW THE STUDY WAS CONDUCTED

This study was conducted in a group of eleven (11) people. This group was further

sub divided into 2 sub groups of 4 people and 1 sub group comprising of 3 people.

Each of theses sub groups was assigned different tasks. The tasks were as follows;

Collection of data: this task involved a subgroup of 3 people who were

responsible to collect data from the Tancoal Energy Ltd. The method used to

collect data was structured interviews which involved direct contact with the

management and inquiring them on different matters regarding the study.

Processing of data: this involved the analysis of data and arranging them in a

way that would provide clear results and gave the researcher the ability to

provide appropriate recommendations.

Report preparation: this involved the whole process of preparing the report or

the Term paper.

1.6. CHAPTER SUMMARY

This chapter has scrutinized the historical background of Venture Capital Funds

which started in USA in late 1930’s. Also the chapter has presented the objectives and

rationale of this study together with its scope and how it was conducted.

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CHAPTER 2

LITERATURE REVIEW

2.0. INTRODUCTION

This chapter presents two aspects of literature review. The first aspect is about critical

literature review where different models about Venture Capital Funds have been

critically evaluated. The second part is about empirical literature review where

findings of other studies concerning the same subject have been discussed.

2.1. THEORETICAL LITERATURE REVIEW

There is a wealth of literature dealing with the issue of Venture Capital Funds

explaining its meaning, how Venture Capital firms are established and many other

relevant issues. Campbell & Catherine (2008) defined Venture Capital Fund as a

pooled investments vehicle that primarily invests the financial capital of third party

investors’ enterprises that are too risky for a standard capital market and bank loans.

Furthermore they explained that Venture Capital Funds create jobs and are good to be

used in new companies with limited operations history and that are too small to raise

capital in public markets and have not reached a point where they are able to service

bank loans or complete debt offering. They explained that the main disadvantage of

Venture Capital funds is that the capitalists who have invested their funds in smaller

and less mature companies have significant control over company’s decisions in

addition to a significant partner of company’s ownership.

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Kirsner Scott (2008) evaluated six stages of financing offered in Venture Capital. The

first stage is Seed Money which is a Low level financing needed to prove a new idea

which is offered by angel investors. The second stage is Start-up stage which is an

early stage that firms need funding for expenses associated with marketing and

product development. First-Round is the third stage characterized by early sales and

manufacturing funds. The fourth stage is Second-Round stage which involves

generating working capital for early stage companies that are selling product, but not

yet turning a profit. The fifth stage is Third-Round: Also called “Mezzanine

financing” which is expansion money for a newly profitable company. The last stage

is Fourth-Round stage which is also known as “bridge financing” and is intended to

finance the "going public" process.

Joseph Bartillet (2005) has evaluated different ways by which Venture Capital firms

meet with the investors because there are no public exchanges listing their securities.

Some of these involve, references from the investors' trusted sources e.g. financial

analysts and other business contacts, the other way is through investor conferences,

symposia and summits where companies interact directly with investor groups in

face-to-face meetings, including a method commonly known as "Speed Venturing",

which is a sort of speed-dating for capital, where the investor decides within 10

minutes whether she/he wants a follow-up meeting.

Herve Lebret (2007) has scrutinized the situations when Venture Capital Fund is

appropriate. Venture capitalists need high returns from the venture funded company,

this makes venture funding an expensive capital source for companies, and most

suitable for businesses having large up-front capital requirements which cannot be

financed by cheaper alternatives such as debt. That is most commonly the case for

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http://en.wikipedia.org/wiki/Mezzanine_financing






intangible assets such as software, and other intellectual property, whose value is

unproven. This is the reason why venture capital is most common in the fast-growing

technology and life sciences or biotechnology fields.

If a company does have the qualities venture capitalists seek including a solid

business plan, a good management team, investment and passion from the founders, a

good potential to exit the investment before the end of their funding cycle, and target

minimum returns in excess of 40% per year, it will find it easier to raise venture

capital.

2.2. EMPIRICAL LITERATURE REVIEW

Various researchers in different countries around the world have conducted studies on

Venture Capital Funds by evaluating areas like the growth of this financing method in

their countries. Also various studies have been conducted about the challenges and

limitations facing Venture Capital Funds. This part discusses the findings of the

studies conducted in both developed and less developed countries.

Recent studies conducted by The National Venture Capital Association (NVCA) of

USA in (2008) found out that Venture Capital fund sector has grown substantially

starting from 2006. During the third quarter of 2006, Venture capitalists invested

some $6.6 billion in 797 deals in U.S. Also this survey revealed that a majority (69%)

of venture capitalists predict that venture investments in the U.S. will level between

$20-29 billion in 2007 which will lead to the substantial growth of this sector.

The survey conducted by the Venture Capital Association of Canada (2008) revealed

that Canadian technology companies have attracted interest from Venture capitalists

from other countries due to generous tax incentives through the Scientific Research

9

http://en.wikipedia.org/wiki/High-tech


http://en.wikipedia.org/wiki/Life_sciences

http://en.wikipedia.org/wiki/Biotechnology


http://en.wikipedia.org/wiki/Life_sciences

http://en.wikipedia.org/wiki/Biotechnology



and Experimental Development (SR&ED) investment tax credit program. The basic

incentive available to any Canadian corporation performing R&D is a non-refundable

tax credit that is equal to 20% of "qualifying" R&D expenditures (labor, material,

R&D contracts, and R&D equipment). An enhanced 35% refundable tax credit of

available to certain (i.e. small) Canadian-controlled private corporations (CCPCs).

This is because the CCPC rules require a minimum of 50% Canadian ownership in the

company performing R&D, foreign investors who would like to benefit from the

larger 35% tax credit must accept minority position in the company, which might not

be desirable. The SR&ED program does not restrict the export of any technology or

intellectual property that may have been developed with the benefit of SR&ED tax

incentives.

The survey also revealed that Canada also has a fairly unique form of venture capital

generation in its Labour Sponsored Venture Capital Corporations (LSVCC). These

funds, also known as Retail Venture Capital or Labour Sponsored Investment Funds

(LSIF), are generally sponsored by labor unions and offer tax breaks from

government to encourage retail investors to purchase the funds. Generally, these

Retail Venture Capital funds only invest in companies where the majority of

employees are in Canada. However, innovative structures have been developed to

permit LSVCCs to direct in Canadian subsidiaries of corporations incorporated in

jurisdictions outside of Canada.

Studies conducted in Europe show that this continent is experiencing a substantial

growth in the Venture capital sector. The study conducted by The European Venture

Capital Association (2006) revealed that Europe has a large and growing number of

active venture firms. The Venture Capital raised in the region in 2005 including buy

10

http://en.wikipedia.org/wiki/Labour_Sponsored_Venture_Capital_Corporation

http://en.wikipedia.org/wiki/Tax_break

http://en.wikipedia.org/wiki/Labour_Sponsored_Venture_Capital_Corporation

http://en.wikipedia.org/wiki/Tax_break



outs exceeded 60billion Euros, of which 12.6billion Euros were specifically for

venture investment. The study also discovered that in 2006, the top three countries

receiving the most venture capital investments in Europe were the United Kingdom,

with 515 minority stakes sold for 1.78billion Euros, France with195 deals worth 875

Million Euros, and Germany with 207 deals worth 428million Euros.

The study explains further that European venture capital investment in the second

quarter of 2007 rose by 5% to 1.14 billion Euros from the first quarter. However, due

to bigger sized deals in early stage investments, the number of deals was down 20% to

213. In the second quarter of 2007, venture capital investment results were significant

in terms of early-round investment, where as much as 600 million Euros (about 42.8%

of the total capital) were invested in 126 early round deals which comprised more

than half of the total number of deals. Also it was further disclosed that Venture

Capital Funds in Italy during 2007 were 4.2 billion Euros.

The study conducted by Josephson Matthew (2008) in South Africa reveals the major

challenge that Venture Capital Funds face in this country which is South African laws

and regulations. South African laws are a major factor impeding the growth of the

Venture capital sector in the country. These laws restrict the foreign exchange flows

and movement of intellectual property out of the country. Intellectual property made

in South Africa can’t just leave the country or be sold or licensed outside South Africa

without South Africa Reserve bank approval. This requires the Venture Capital firm

to incur heavy costs to get legal advice in order to avoid doing something illegal.


This chapter has critically discussed various literatures concerning Venture Capital

Funds in the theoretical literature review aspect. The findings of studies conducted in

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other countries concerning the same subject were also analysed in this chapter. The

next chapter of this Term Paper presents the case study analysis.

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CHAPTER 3

CASE STUDY ANALYSIS

3.0. INTRODUCTION

This section is a vital part of the study because it reveals the findings and results of

the study. It presents the results that were obtained in the field regarding the questions

that were asked relating to the objectives of this study.

3.1. CASE STUDY

THE NAME OF THE COMPANY

This Term Paper used TANCOAL Energy Limited in Tanzania as a case study of a

Venture Capital funded company

THE LOCATION OF THE COMPANY

Most of the operations of TANCOAL are conducted in Southern Tanzania but it has

its headquarters in Dar es salaam.

THE MAJOR ACTIVITIES OF THE COMPANY

TANCOAL Energy Limited is involved with exploring mining resources related to

the energy sector and it is currently holding a number of prospecting concessions

which have been granted as applications.

THE MAJOR OBJECTIVE OF THE COMPANY

TANCOAL Energy Limited is aimed at exploiting coal resources at Ngaka and

Mhukuru in Ruvuma region, Southern Tanzania. The company focuses on the

development of the Ngaka and Mhukuru coal deposits in Mbinga and Songea districts

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as a solution to the problem of power shortages in Tanzania. This is by enhancing the

national energy security by decreasing dependence on electricity imported from

outside the country.

THE ORIGIN OF TANCOAL ENERGY LIMITED

The company was formed in 2008, The National Development Corporation (NDC) for

a long time desired to explore and exploit coal resources in the Southern Tanzania

lacked sufficient capital to undertake the activity. So in 2008, NDC invited Pacific

Corporation East Africa (PCEA) to invest in the project. So the agreement was

entered where PCEA was supposed to provide a proportion of capital needed for the

project. This proportion of capital is known as Venture Capital Fund. The other

proportion was to be provided by NDC. The $1.2 billion, which was the total

combined capital, would be used to develop a coal feedstock, construction of a

400MW coal-fired power station and erecting a long distance, high voltage

transmission line.

The agreement required the formation of a new company in 2008 namely TANCOAL

Energy Ltd. The principal business of this company is to explore mining resources

related to the energy sector and it is currently holding a number of prospecting

concessions which have been granted as applications.

Since its incorporation in 2008, TANCOAL Energy Limited has been able to expand

its capital by offering shares, whereby majority of its shares are owned by Atomic

Resources Limited which is based in Australia. The company has been able to

succeed in one year because the drilling programme has provided results for seam

correlations, and has confirmed stratigraphic continuity and classification of coal

reserves. Also the preliminary resource work shows that Ngaka has about 90-120

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million tonnes of coal reserves which can be mined by a combination of opencast and

underground methods. Since its formation, TANCOAL has spent Tshs 1.4 billion

($1.27 million) on studies and fieldwork.

TANCOAL Energy Limited is enthusiastic that it will create opportunities from

excess power production that would be exported to other countries in the future. Also

power tariffs will be reduced and the outflows and exchange risks of foreign currency

required to purchase fuel or to import electricity from outside Tanzania will decrease.

Power from coal is expected to promote rural electrification which will stimulates

development of various economic sectors such as mining, agriculture, industry and

tourism and would accelerate industrialization and poverty eradication. For the past

50 years, Tanzania has been trying to explore coal in collaboration with multinational

mining companies but no significant results have been obtained to date. However,

TANCOAL has been able to achieve significant results in just a year of operation.

3.2. PRESENTATION OF THE FINDINGS

During the process of collecting data from TANCOAL Energy Limited, questions

were asked in accordance with the study objectives, below are the findings of this

study with respect to every objective of the study.

Objective 1: To evaluate the importance of using Venture Capital Funds in financing

the businesses.

The findings from TANCOAL management revealed that Venture Capital Funds are

very important compared to borrowing from bank because it allows a company to

carry out projects which are very risk. Before formation of TANCOAL, NDC didn’t

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have enough funds to carry out the coal exploration because the project is very risk

and the probability of getting loss is very high. They couldn’t obtain funds from the

bank because there is no commercial bank that can lend money to a project that has

high risk and high probability of losses. This is due to the fact that coal exploration

involves heavy costs and there is no guarantee that the coal reserves will be found. So

the only way was to invite Venture Capitalists (Pacific Corporation East Africa), who

would be able to take the high risk to provide the funds for the project which resulted

in the formation of TANCOAL Energy Ltd.

So Venture Capital Funds allow a company to invest in the high risk projects that any

other sources of funds i.e. commercial banks loans would not provide funds for due to

the maximum risk.

The other importance of using Venture capital Funds is that there is no an obligation

to pay back the funds like in borrowings. NDC and PCEA had an agreement to form

TANCOAL, so TANCOAL has no an obligation to pay back the funds invested in it,

however the investors will be able to get their money back through profits which will

be made by TANCOAL i.e. Return on Investment (ROI). If TANCOAL makes losses,

then the Venture Capitalists have to be tolerant and let the company continue to

operate with the expectation of the profits in the future. They can’t ask for their

money back because they were made aware of the risks before investing. But if

TANCOAL was funded by loans and the company incurs losses that it can’t service

the debt together with interest then it can be in a blink of being liquidated so as to

repay the debt which will affect its long term existence.

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Objective 2: To assess the factors limiting the use of Venture Capital funds in

Tanzania.

The findings of this study reveal problems which limit the use of venture capital funds

in Tanzania. These are as follows;

Many businesses in Tanzania are family owned; this causes owners to be

reluctant to extend ownership to the other people through the provision of

venture capital funds. Also family owned businesses don’t like to disclose

some aspects of their business which are family secret. This causes them to

fail in expanding their businesses through listings or venture capital funds

which require full disclosure.

Tanzania is characterized by a huge number of small and medium scale

enterprises which rely only on bank loans and informal sources of funding.

These businesses don’t give regard to funding methods like shares and venture

capital funds.

Costs associated with funding venture capitalists are also a problem. To get a

venture capitalist is not an easy task, you have to do research to determine

worth individuals who are willing to take risk and invest in your company. It

involves advertising your business, preparing good business proposals and

transport and accommodation costs to meet with venture capitalists to

convince them face to face i.e. a venture capitalist is in Boston, Massachusetts

(USA) while the business is in Tanzania.

Bad reputation of Tanzanians in management issues; nowadays the level of

corruption has increased together with embezzlement of companies’ funds.

Due to information technology most of the people around the globe are aware

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of the current corruption issues occurring in Tanzania. This has a negative

impact because most venture capitalists like businesses which can be managed

well and offer a high return on investment (ROI). Due to this bad reputation

which can be stereotyped, venture capitalists from abroad become reluctant to

invest their funds in Tanzanian businesses fearing to get no return.

Many Tanzanians are risk averse, this causes them to become reluctant to

invest in riskier businesses but which have high returns i.e. mining and

exploration. But TANCOAL took a risk to explore coal and it has achieved

much in just a year since its incorporation in 2008.


This chapter has presented the findings and results of the study. This was done

through the analysis of findings by using the objectives established before.

The next chapter presents the recommendations of the study.

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CHAPTER 4

RECOMMENDATIONS

4.1. INTRODUCTION

This is the last chapter of this study and it presents the recommendations on the issue

of Venture capital fund in Tanzania.

4.2. RECOMMENDATIONS

It is vital for the government to control inflation and maintain it in a single digit

because some investors don’t like to invest their funds in the economies with

increasing rates of inflation. By controlling inflation even the Tanzanian currency will

be stable and this can ensure international investors that they will get a high rate of

return in Tanzanian shillings with a high purchasing power. For instance there is no a

rational investor who would like to invest in Zimbabwe at its current condition of

hyper inflation.

The government should also privatise public entities which are not performing well.

This is because there are wealth individuals who are willing to provide funds for these

entities if they were private because they believe that with proper management they

could perform better than they are performing currently under the government

ownership.

The capital market and security authority (CMSA) should educate the people that

there is a venture capital funding method which is not very common to Tanzanian

businesses. The authority should conduct seminars with small business owners urging

them that bank loan is not the only way of funding a business, and they should

19



enlighten the people on the importance of using venture capital funds.

Nowadays the life standards of Tanzanians have raised, there are private individuals

who have bank accounts with up to 8 digits. These people should provide capital to

small businesses but which grow fast and have good future prospects. Keeping the

money in the bank without rotating it is irrational. So it would be rational to provide

these funds as venture capital funds so that others can do business and get a desirable

return on investment (ROI). Venture capital sector in USA developed fast because

wealth individuals like the Rockefellers were ready to provide funds so that others

could invest and give them the part of their return.

Also Life Assurance Funds companies like NSSF, PPF and insurance companies in

Tanzania like NIC should engage themselves in providing venture capital funds.

These companies collect huge sums of money from its customers since most of the

people employed in various sectors in the economy are registered with any of these

companies. They should encourage small and growing businesses to expand their

businesses by investing their funds and later get their return on investment.

4.3. CONCLUSION

This term paper has scrutinised the type of funding commonly known as venture

capital funding, its importance and problems limiting its use in Tanzania. Tanzania as

a developing country needs to expand its business sector, any investment involves

risk, and the wealthiest people in the world are the ones who undertook very risk

projects e.g. mining. So this term paper urges Tanzanian entrepreneurs to consider

also the venture capital funding instead of just relying on borrowings from

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commercial banks which are profit oriented and have harsh loan terms e.g. high

interest rates. So by encouraging venture capital funding investments across Tanzania

will increase which obviously will expand employment to the individuals and will

increase government revenue due to income taxes and Value added Tax (VAT).

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REFERENCES

1. Bartillet, J (2005): Value Added by Venture Capital Firms, San Diego,

California (USA).

2. Campbell and Catherine, 2008: Smarter Ventures: A Survivor's Guide to

Venture Capital Through the New Cycle, New York, USA.

3. Lebret, H (2007): The Money Lords; the great finance capitalists and

Venture Source, Munich, Germany

4. Matthew, J (2008): Introduction to Venture Capital and Private Equity

Finance in South Africa” Johannesburg, South Africa.

5. Scott, K (2008): The Venture Capital Cycle, 2nd ed., MIT press, Leicester,

United Kingdom.

6. The European Venture Capital Association (2006): The growth of Venture

Capital Sector in Europe, Paris, France.

7. The National Venture Capital Association (NVCA) (2008): The Venture

Capital trend in USA, USA.

8. The Venture Capital Association of Canada (2008): Venture Capital

development in Canada, Toronto, Ontario (Canada).

http://en.wikipedia.org/wiki/Matthew_Josephson

http://vcexperts.com/vce/library/encyclopedia/book_contents.asp?book_number=0


http://en.wikipedia.org/wiki/Matthew_Josephson



the historical background of venture capital fund

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