Venture capital in regional Australia: attitudes toward venture capital requirements among SME principals and their advisors

This paper provides results from exploratory research examining attitudes of regional SME principals and their professional advisors toward venture capital and postulates how this may affect regional SME use of venture capital. The research was conducted as part of a larger project investigating relationships between venture capital, venture capitalists and regional SME development. Analysis using exploratory factor analysis identified three factors representing investment determinants, venture capital benefits and relationship issues, with SME principals and their advisors being cognisant of the importance of investment determinants but uncertain as to the benefits of venture capital and the role of interpersonal relationships. It was therefore concluded that delivery of venture capital to regional SMEs is potentially being limited by SME principal and advisor attitudes regarding its value and their understanding of the importance of interpersonal relationships. Introduction One of the most significant limitations faced by SMEs is the lack of available capital for infrastructure and market development (Bull, Pit & Szorka 1991; Bijmolt & Zwart 1994; Carmichael 1994; Holmes & Zimmer 1994; Kirchoff 1995; Murphy 2001). The provision of venture capital has been suggested as a possible solution to this problem. However limited access to venture capital remains a major issue for small innovative businesses in Australia