Abstract
Background: The debate on the influence of gender on small and medium-sized entities’ (SMEs) access to finance from a demand-side perspective is still ongoing. This study seeks to contribute to the debate from an emerging economy (South Africa) perspective. Aim: The study investigated whether there is a gender gap in SME access to venture capital, a distinct source of finance. Setting: SMEs play a significant role in South Africa’s economy. Despite the importance of SMEs, access to finance is one of the major constraints affecting their success rate. Globally, to enhance the probability of SME survival, small business practitioners and governments are in search of relevant support measures. One of those measures could be adequate access to venture capital. However, it is sad to note that SMEs seldom use this distinct source of finance. Methods: The study made use of the quantitative method of research and is descriptive by design. Self-administered questionnaires were emailed to respondents for the purposes of gathering primary data. The t-test was used to statistically analyse primary data. Results: The results reveal that there is a statistically significant difference in the accessibility of venture capital between male- and female-owned SMEs. Conclusion: The article concludes that a gender gap in access to venture capital exists owing to differences in business approach between female entrepreneurs and their male counterparts. Female entrepreneurs are cautious about the level of risk they are willing to take and the amount of control they wish to exercise in firm ownership.
Highlights
In contrast to previous years, policymakers in developing nations are currently stepping up efforts to promote economic expansion activities of female-owned enterprises (Klapper & Parker 2011)
Regarding access to money and funds from venture capitalists, results reveal that there is a statistically significant difference in the access to money from venture capitalists evidenced by a mean score for men (M = 3.79, standard deviation [SD] = 1.25) and women (M = 2.78, SD = 1.5; t(66.831) = 3.07, p = 0.003, two-tailed)
The results reveal that gender has a significant influence on the access of venture capital by small and medium-sized entities’ (SMEs), leading to this study rejecting the null hypothesis
Summary
In contrast to previous years, policymakers in developing nations are currently stepping up efforts to promote economic expansion activities of female-owned enterprises (Klapper & Parker 2011). Despite the importance of female entrepreneurship across the globe, female-owned firms are more likely to terminate operating activities within 5 years of operation owing to limited access to financial resources, such as venture capital (Cant & Wiid 2013; Fatoki & Smit 2011; Flowers et al 2013). This article considers a distinct source of funds in the form of venture capital, which plays a crucial role in small and medium-sized entity (SME) start-ups and growth (Lucey 2010). Memba et al (2012) further argued that venture capital is the best source of business finance, it is seldom used. Their findings revealed that venture capital has a positive impact on SME growth. This study seeks to contribute to the debate from an emerging economy (South Africa) perspective
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