The domestic venture capital and private equity (VC/PE) sector is witnessing a resurgence of interest from local investors, driven primarily by increasing confidence and a collaborative approach championed by the Venture Capital Trust Fund (VCTF).
This renewed interest is particularly evident among pension funds, which are now recognising the VC/PE asset class’s potential after years of reluctance.
In an interview, Percival Ofori Ampomah, General Manager-VCTF, shed light on the fund’s ongoing efforts to engage and educate co-investors in ensuring the industry’s sustainability and growth.
As the driving force behind VCTF, Mr. Ampomah emphasised the critical role local investors play in the venture capital ecosystem, noting that local investors, especially pension funds, have historically been cautious about venturing into the relatively unfamiliar territory of VC/PE – preferring the safety of government bonds and traditional equities.
However, Mr. Ampomah pointed out that this is changing thanks to VCTF’s proactive efforts to demystify the asset class through seminars, workshops and targetted awareness campaigns.
“Recently, pension funds have shown a growing interest in venture capital,” Mr. Ampomah noted. “This wasn’t the case in the past when there was a general reluctance to engage with the asset class. We’ve worked hard to educate and build awareness among these investors, and now we’re seeing the fruits of that labour.”
This shift in attitude is not only vital for growth of the VC/PE sector but also crucial for addressing the funding gap faced by small- and medium-sized enterprises (SMEs) in Ghana.
According to the General Manager, while external funding continues to flow into the country, most of it is not directed toward the SMEs that need it most. This gap underscores the importance of local investment in sustaining these enterprises’ growth – and by extension the broader economy’s.
“The external funding that comes in often doesn’t reach the smaller companies which are the backbone of our economy,” Mr. Ampomah explained. “This is why it’s so important for our local investors to step up and invest in these companies. It’s about creating a sustainable ecosystem where our businesses can thrive.”
To this end, VCTF recently organised a comprehensive seminar aimed at enhancing the capacity of co-investors in the VC/PE space. The event brought together key stakeholders, including pension funds, to discuss the intricacies of venture capital, share ideas and align on best practices.
Mr. Ampomah stressed that the seminar was not intended to be a one-way lecture, but rather a platform for collaboration where investors could voice their concerns, share experiences and collectively work toward a common goal.
“We organised this seminar to ensure that we, as investors, are all aligned in our understanding and approach to evaluating fund managers and investment opportunities,” Mr. Ampomah said. “It’s a collaborative effort. We want to make sure that everyone is on the same page, speaking the same language and adhering to the same standards when it comes to due diligence and reporting.”
The importance of collaboration in the VC/PE sector cannot be overstated. Ampomah highlighted the need for standardised due diligence processes across all investors to safeguard the industry’s integrity. This standardisation is crucial in preventing financial mishaps that could tarnish the asset class’s reputation and discourage further investment.
“We don’t want any bad stories in the next ten years,” Mr. Ampomah asserted. “By collaborating and standardising our processes, we can protect the industry from unscrupulous players who might otherwise damage the reputation we’ve worked so hard to build.”
In addition to due diligence, the seminar also focused on Environmental, Social and Governance (ESG) factors’ importance in private equity investments. As the industry evolves, investors are increasingly recognising the need to incorporate ESG considerations into their investment decisions to ensure long-term sustainability and positive impact.
