Venture Capital firms face additional risks and challenges when investing in start-ups in foreign markets because of the increased geographical, institutional, and cultural distance to potential investment targets resulting in Liabilities of Foreignness. Despite these challenges, there are increasing numbers of cross-border investments in the African market. This dissertation explores the drivers of the increasing interest in African start-ups and how foreign investors are overcoming the liabilities of foreignness. The exploratory study uses a qualitative research approach in the form of semi-structured interviews with 12 active investors in Africa. The results highlight the numerous drivers of the growing African Venture Capital market and the different internationalization strategies applied by foreign investors. Moreover, foreign investors in Africa must adapt their traditional investment process to local conditions. Foreign investors use additional risk assessment signals the deal evaluation and not only invest in later rounds, but also place more emphasis on entrepreneurial characteristics and the expertise of local co-investors. Additionally, foreign investors conduct extensive risk analysis of potential macro-economic scenarios potentially impacting local business models. Post-investment activities by foreign investors are strategic by providing an international context to local African start-ups. This thesis adds to existing literature on internationalization of VC firms with a focus on the African continent.
Date of Award | 18 Oct 2022 |
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Original language | English |
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Awarding Institution | - Universidade Católica Portuguesa
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Supervisor | José Vasconcelos e Sousa (Supervisor) |
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- Venture Capital
- Internationalization
- Liabilities of foreignness
- Investment process
- African traditional religion
- Mestrado em Gestão e Administração de Empresas
Overcoming liabilities of foreignness: expanding to Africa as a foreign Venture Capitalist
Duczek, M. (Student). 18 Oct 2022
Student thesis: Master's Thesis