VCTF plans initiatives to boost investment ecosystem

The Venture Capital Trust Fund (VCTF) has announced its introduction of two key initiatives – the Venture Capital Analyst Programme (V-CAP) and Fund Manager Development Programme (FMDP) – in a bid to bolster the rapidly growing venture capital and private equity sector.

These initiatives aim to nurture talent and build capacity for the next generation of fund managers, ensuring a sustainable pipeline of skilled professionals to drive the industry’s growth.

The announcement comes as Ghana’s venture capital market is projected to reach a total capital raised of US$290.3million by 2024, with the Later Stage sector dominating the market with an expected volume of US$237.8million in the same year.

Percival Ofori Ampomah, General Manager-VCTF, highlighted the importance of these programmes during a recent training session for industry stakeholders. “When we started, venture capital financing was quite opaque. It’s a new concept, even though it’s been around for 20 years. It’s still new to some people,” Mr Ampomah explained. “With the projected growth in our market, it’s crucial that we develop the local expertise to manage and sustain this expansion.”

The VCTF, established to provide long-term financing for SMEs with high growth potential, has been instrumental in implementing the Ghana Economic Transformation Programme (GETP). This programme aims to improve the business environment, investment attraction capacity and quality infrastructure support for companies looking to invest and grow in Ghana.

The General Manager emphasised VCTF’s role in placing Ghana on the private equity and venture capital map in Africa. “The activities of VCTF have placed Ghana on the PE/VC map in Africa by hosting industry-related events which continue to attract PE/VC firms into the country,” he stated. “This has contributed significantly to projected growth we’re seeing in the market.”

One of VCTF’s notable achievements has been establishing the Ghana Venture Capital and Private Equity Association (GVCA), which serves as the PE/VC industry’s mouthpiece in the country. This move has helped to create a more structured and cohesive venture capital ecosystem in Ghana, supporting the market’s impressive growth trajectory.

The newly announced V-CAP and FMDP programmes are designed to address the industry’s skills gap, particularly in the Later Stage sector which is set to dominate the market.

“We’ve taken them through training in the past,” Mr Ampomah said, referring to local investors and institutions. “We have an upcoming training that is going to be with the investors that we have invested with, such as pension funds and other institutions. The idea is bringing them up to speed with knowledge of venture capital financing, especially in managing later-stage investments.”

These training initiatives are part of a broader strategy to build local capacity for investments. The VCTF began by collaborating with banks, despite their unique needs and challenges. “Banks have peculiar needs and challenges. They may not understand the model, but we started with them. And they did a good job at seeding the venture capital,” Ampomah noted.

Currently, VCTF is expanding its focus to work with pension funds. The General Manager revealed plans for further expansion,stating: “Hopefully, in the coming years we might extend that to other potential investors – such as the insurance industry that’s also holding long-term funding – in order for us to build that local capacity for local investments”.

This diversification is crucial as the market approaches its projected US$290.3million market size.

The introduction of these programmes comes at a crucial time for Ghana’s economy. SMEs contribute significantly to the country’s GDP and employment, making support for this sector vital. By developing a robust venture capital industry, VCTF aims to provide the necessary financial backing and expertise to help these businesses thrive and contribute to the projected market growth.

However, challenges remain. Ampomah acknowledged that despite VCTF’s efforts and the projected market growth, there is still a considerable funding gap. “We have a pipeline of more than US$82million looking for co-funding to support SMEs that we cannot find,” he revealed, highlighting the sector’s ongoing need for increased investment.

VCTF’s initiatives are not limited to training programmes. The organisation is also working on legal reforms to attract more foreign investment and support the growing market. “We have identified that we need to reform Ghana’s legal regime when it comes to forming legal structures,” he explained. “Venture Capital is at the head, trying to come up with a Limited Partnership Act. We’ve started work on it already.”