Ghana’s
Venture
Capital
Trust
Fund
has
gone
beyond
its
own
equity
financing
of
early
stage
SMEs
–
in
collaboration
with
private
investors
–
to
engage
in
several
key
initiatives
aimed
at
creating
a
self-sustaining,
private
sector
led
venture
capital
and
private
equity
industry.
TOMA
IMIRHE
examines
what
it
is
doing
and
how
its
efforts
will
impact
corporate
Ghana.
The
Venture
Capital
Trust
Fund
has
mobilized
some
GHc278.277
million
which
is
currently
invested
in
start
up
and
early
stage
small
and
medium
sized
companies
which
have
illustrated
clear
commercial
viability
and
the
managerial
capacity
to
fulfill
their
economic
potentials.
Importantly,
this
specialized
state-owned
financial
institution
has
succeeded
in
mobilizing
five
times
as
much
from
commercial
financing
institutions
and
fund
management
firms
as
it
has
put
up
itself.
This
is
crucially
important
because
the
financing
that
the
VCTF
has
mobilized
is
equity
capital,
rather
than
debt
and
this
is
critical
in
an
economy
where
debt
is
the
preferred
mode
of
business
financing
for
entrepreneurs
but
the
debt
tends
to
be
too
expensive
and
short
tenured
to
support
economic
viability.
Instructively
the
Ghana
Stock
Exchange
has
not
attracted
nearly
as
many
equity
capital
seeking
companies
as
was
anticipated
over
its
nearly
three
and
a
half
decade
history
and
the
Ghana
Alternative
Exchange
GAX,
which
was
established
specifically
for
SMEs
that
do
not
qualify
for
listing
on
the
GSE
itself,
has
attracted
more
long
term
debt
issuing
companies
than
equity
seeking
ones.
This
means
that
the
VCTF
has
effectively
opened
a
new
door
for
SMEs
with
regards
to
relatively
cheap
and
long
tenured
financing
which
vastly
improves
their
chances
of
growth
and
sustained
commercial
viability
–
one
which
has
the
potential
to
bring
about
a
paradigm
shift
for
the
better
in
how
corporate
Ghana
approaches
the
issue
of
business
financing.
Most
importantly
though
the
VCTF
is
acutely
aware
that
for
corporate
Ghana
to
benefit
fully
from
its
cutting
edge
activities
it
needs
to
nurture
a
vibrant
venture
capital
and
private
equity
industry
which
ultimately
will
no
longer
need
the
industry
development
role
played
by
the
state
through
the
VCTF
itself.
This
it
is
doing
with
similarly
exemplary
skill
and
commitment
to
that
with
which
it
is
partnering
commercial
fund
managers
to
provide
the
equity
capital
that
is
propelling
lots
of
early
stage
SMEs
on
a
fast
tracked
trajectory
of
growth
and
sustainable
profitability.
.
.
“The
objectives
of
VCTF’s
advocacy
efforts
are
to
expand
and
deepen
the
venture
capital
and
private
equity
(VC/PE)
industry
in
Ghana”
asserts
Percival
Ofori
Ampomah,
the
institution’s
General
Manager.
“VCTF
has
played
an
instrumental
role
in
developing
the
VC/PE
ecosystem
through
various
interventions:”
Indeed
one
of
these
is
the:
establishment
of
the
Ghana
Angel
Investor
Network
(GAIN)
in
2011
to
promote
angel
investing
as
an
alternative
financing
source
for
startups.
This
has
mobilized
astute
relatively
high
network
investors
who
can
recognize
an
outstanding
equity
investment
opportunity
in
an
early
stage
SME
by
formally
organizing
high-net-worth
individuals
to
invest
in
and
mentor
entrepreneurs.
Instructively
GAIN
is
the
first
angel
investor
network
in
Ghana
and
aims
to
promote
angel
investing
as
a
source
of
early-stage
financing
for
startups.
VCTF’s
role
in
creating
and
supporting
GAIN
has
been
crucial
in
catalyzing
the
angel
investing
landscape
in
the
country.
Another
is
the
VCTF’s
pivotal
technical
and
financial
support
for
the
creation
of
the
Ghana
Alternative
Exchange
(GAX)
to
facilitate
SME
listings
and
access
to
capital,
both
equity
and
debt,
by
companies
that
are
not
large
enough
or
old
enough
to
list
on
the
GSE
itself.
Then
there
is
the
VCTF’s
hosting
of
industry
events
that
have
attracted
more
venture
capital
and
private
equity
firms
to
Ghana.
Add
to
this
the
state
institution’s
helping
establish
other
industry
institutions
like
the
Ghana
Venture
Capital
and
Private
Equity
Association
(GVCA),
Impact
Investing
Ghana
(IIGH)
–
which
currently
manages
GAIN
–
and
the
GIMPA
Center
for
Impact
Investing
(GCII);
all
of
which
are
serving
as
platforms
for
the
industry
to
collaborate,
network
and
expand
its
capacities.
The
biggest
and
most
important
of
these
industry
groupings
is
the
Ghana
Venture
Capital
and
Private
Equity
Association
(GVCA)
which
was
established
with
the
support
of
VCTF.
GVCA
is
an
industry
association
that
brings
together
Venture
Capital
and
Private
Equity
fund
managers,
investors,
and
other
stakeholders
in
the
ecosystem.
Its
objectives
are
to
promote
the
development
of
the
industry,
advocate
for
favorable
policies,
and
facilitate
knowledge
sharing
and
networking.
Confirms
Percival
Ampomah:
“VCTF
played
a
catalytic
role
in
the
creation
of
GVCA
by
being
the
key
sponsor
and
continues
to
be
involved
in
its
management
and
activities,
leveraging
the
association
as
a
platform
to
drive
its
advocacy
agenda.”..
He
enthuses
that
these
efforts
have
placed
Ghana
on
the
Venture
Capital
and
Private
Equity
map
in
Africa
and
laid
the
groundwork
for
a
more
vibrant
and
structured
industry.
“Going
forward,
VCTF
aims
to
continue
playing
a
catalytic
role
in
further
developing
the
ecosystem
through
policy
advocacy,
capacity
building,
and
facilitating
more
private
capital
mobilization.”
he
assures.
Another
key
intervention
being
made
by
the
VCTF
towards
developing
a
self-sustaining,
private
sector
led
venture
capital
and
private
equity
industry
in
Ghana
is
its
efforts
in
support
of
the
drafting
and
subsequent
passage
into
law
of
a
Limited
Liability
Partnership
Act.
“VCTF
is
providing
technical
inputs
towards
the
development
of
a
Limited
Liability
Partnership
(LLP)
Act
in
Ghana”
reveals
Percival
Ampomah.
“This
legislation
is
expected
to
strengthen
the
regulatory
environment
for
Venture
Capital
and
Private
Equity
activities
by
establishing
a
dedicated
legal
framework
for
these
investment
vehicles.”
Indeed,
equity
fund
managers
and
investors
alike
agree
that
the
impending
LLP
Act
will
help
address
current
challenges
around
taxation,
asset
class
categorization,
and
the
requirement
for
all
Venture
Capital
funds
receiving
tax
breaks
to
be
legally
registered
in
Ghana.
“VCTF’s
involvement
in
shaping
this
Act
is
crucial,
as
it
will
create
a
more
enabling
environment
for
the
growth
of
the
VC/PE
industry”
asserts
Percival
Ampomah.
At
the
same
time
the
VCTF
is
actively
and
concertedly
engaged
in
strategic
efforts
to
raise
awareness
about
venture
capital
and
private
equity
as
alternative
financing
options,
targeting
both
potential
investors,
entrepreneurs
and
SMES.
It
is
doing
this
by
organizing
workshops,
SME
round
table
discussions,
conferences,
media
campaigns,
and
other
outreach
initiatives
to
educate
key
stakeholders
and
generate
greater
interest
and
participation
in
the
Venture
Capital
and
Private
Equity
ecosystem.
Crucially,
the
VCTF
is
relying
on
partnerships
and
collaborations
with
other
stakeholder
institutions
to
install
a
vibrant,
self
–
sustaining
venture
capital
and
private
equity
industry
for
the
benefit
of
corporate
Ghana
and
the
wider
economy.
“In
a
broader
context,
VCTF
collaborates
with
relevant
government
agencies,
industry
associations,
and
development
partners
to
drive
its
advocacy
agenda
and
mobilize
resources
for
the
VC/PE
ecosystem”
explains
Percival
Ampomah
“This
includes
policy
support,
funding,
and
joint
initiatives
to
promote
the
industry
and
attract
more
investors
and
entrepreneurs”
Ultimately
the
VCTF’s
efforts
are
bearing
palpable
fruit.
The
venture
capital
and
private
equity
industry
is
quietly
but
rapidly
growing
as
exemplified
not
only
by
the
sharp
growth
in
local
capacity
and
activity
but
the
expanding
presence
of
and
investments.by
major
international
private
equity
funds
in
Ghana
as
well.