Keywords
Venture Capital Investment
Tech SMEs
Nasarawa State
Nigeria. 
Abstract
The entrepreneurial landscape in Nigeria, particularly in Nasarawa State, is evolving, with tech small and medium enterprises (tech SMEs) recognized as pivotal to economic growth. This study aims to investigate the influence of innovativeness on attracting venture capital investment among tech SMEs within Nasarawa State. The objectives include assessing the relationship between innovativeness and investment amounts and evaluating how innovative practices affect the attractiveness of tech SMEs to venture capitalists. Utilizing a positivist approach, the research surveyed a population of 9,874 registered SME owners from the Nasarawa State Ministry of Commerce and Industries (2024). A sample of 384 was determined using Taro Yamane's formula. Data were collected through structured questionnaires and analyzed using regression analysis in SPSS. The findings revealed significant relationships, with all three null hypotheses rejected: (1) Innovativeness significantly affects venture capital investment decisions (r = 0.912, p < 0.01); (2) Higher levels of innovation correlate with increased investment amounts (r = 0.874, p < 0.01); (3) Innovative practices positively influence venture capitalists' investment strategies (r = 0.845, p < 0.01). The study concludes that fostering a culture of innovation among tech SMEs can enhance their attractiveness to venture capitalists, thus stimulating economic growth in Nasarawa State. Recommendations include developing tailored innovation frameworks and enhancing training for tech SME owners to improve their innovative capabilities.
References
1. Akinboyo, G. B. (1987). Job creation as a productivity measure for employment problems in developing countries: The Nigeria and Holland experience. In Increasing Productivity in Nigeria (pp. 404–411).
2. Alavi, S., & Khalili, A. (2023). The impact of innovative practices on venture capital investment strategies. Journal of Business Research, 142, 456–467. https://doi.org/10.1016/j.jbusres.2022.01.012
3. Baker, T., & Nelson, R. (2022). Creating something from nothing: Resource construction through entrepreneurial bricolage. Administrative Science Quarterly, 67(1), 1–29.
https://doi.org/10.1177/0001839219871230
4. Chen, X., & Zhang, Y. (2022). Innovation and venture capital: An empirical analysis of the relationship. Research Policy, 51(7), 104470. https://doi.org/10.1016/j.respol.2022.104470
5. Davila, A., Foster, G., & Gupta, M. (2003). Venture capital financing and the growth of startup firms. Journal of Business Venturing, 18(6), 689–708. https://doi.org/10.1016/S0883-9026(03)00005-1
6. Dejardin, M., & Fritsch, M. (2011). Entrepreneurial dynamics and regional growth. Small Business Economics, 36(4), 377–382. https://doi.org/10.1007/s11187-009-9221-2
7. Fritsch, M. (2008). How does new business formation affect regional development? Introduction to the special issue. Small Business Economics, 30(1), 1–14.
https://doi.org/10.1007/s11187-007-9068-x
8. Fritsch, M., & Mueller, P. (2004). Effects of new business formation on regional development over time. Regional Studies, 38(8), 961–975. https://doi.org/10.1080/0034340042000280915
9. Fritsch, M., & Noseleit, F. (2009). Investigating the anatomy of the employment effects of new business formation (No. 2009, 001). Jena Economic Research Papers.
10. Gimeno, J., Folta, T. B., Cooper, A. C., & Woo, C. Y. (1997). Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms. Administrative Science Quarterly, 750–783. https://doi.org/10.2307/2393656
11. Goldberg, R. T. (2012). An introduction to start-up financing and a new approach to attracting capital resources. StartupFactory, LLC. White Paper.
12. Gompers, P., & Lerner, J. (1999). The venture capital cycle. Cambridge, MA: MIT Press.
13. Gupta, A., & Singh, R. (2023). The correlation between innovation levels and venture capital funding in tech SMEs. International Journal of Entrepreneurial Behavior & Research, 29(2), 213–229. https://doi.org/10.1108/IJEBR-09-2021-0541
14. Inah, E. U., Ajor, O. M., Jacob, M. E., Chisobem, U. B., & Mbong, I. T. (2024). Effect of venture capital financing on the financial performance of tech SMEs in Cross River State. Wukari International Studies Journal, 8(2), 136–148.
15. Juha, W. (2010). Venture capital investment in small and medium-scale enterprises. Lappeenranta University of Technology: Unpublished thesis.
16. Kibiriti, P., Chiffon, N., & Oslund, J. (2000). Enterprise Africa. March – May, 1(1).
17. Lee, J., & Kim, S. (2024). The role of innovation in attracting venture capital: Evidence from emerging markets. Venture Capital, 26(1), 1–22. https://doi.org/10.1080/13691066.2023.2194620
18. Lerner, J. (2000). Small business, innovation, and public policy in the information technology industry. Washington ,D.C.: MIT Press.
19. Martinez, L., & Torres, J. (2022). Innovative practices and their influence on venture capital investment strategies. Journal of Small Business Management, 60(1), 45–67.
https://doi.org/10.1080/00472778.2021.1950214
20. Mason, C., & Harrison, T. R. (2008). Developing time series data on the size and scope of the UK business angel market. Department for Business, Enterprise and Regulatory Reform.
21. Mbhele, M. (2018). The impact of venture capital finance on the performance of small and medium enterprises in Kenya. International Journal of Business and Social Science, 3(6), 200–6200.
22. Memba, F. S. (2011). The impact of venture capital finance on the performance of small and medium enterprises in Kenya. Retrieved from
http://ir.jkuat.ac.ke/bitstream/handle/123456789/1772/Memba%2C%20Florence%20Sigara%20-PH D%20Entrepreneurship-2011.pdf?sequence=1&isAllowed=y
23. Mogiro, S. (2012). Relating Kenyan manufacturing tech SMEs' finance needs to information on alternative sources of finance. South Africa Journal of Information Management, University of Zululand.
24. Myers, S., & Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221. https://doi.org/10.1016/0304-405X(84)90023-0
25. O’Reilly, C. A., & Tushman, M. L. (2024). The ambidextrous organization: How to succeed in a turbulent environment. Harvard Business Review Press.
26. Panday, I. M. (2003). Financial management. India: Vikas Publishing House.
27. Riding, A. L., & Short, D. M. (2017). Some investor and entrepreneur perspectives on the informal market for risk capital. Journal of Small Business & Entrepreneurship, 5(2), 19–30. https://doi.org/10.1080/08276331.2017.1289745
28. SMEDAN. (2006). Small and Medium Enterprises Development Agency: Annual Report.
29. Smith, J. A. (2005). Empirical study of a venture capital relationship. Emerald Insight, 18(6), 756–783. https://doi.org/10.1108/14691930510633220
30. Tambunan, T. (2008). Development of SME in ASEAN with reference to Indonesia and Thailand. Chulalongkorn Journal of Economics, 20(1), 53–83.
31. The World Bank. (2015, March 03). Scaling-up SME access to financial services in the developing world. The World Bank.
32. Tucker, J., & Lean, J. (2013). Small firm finance and public policy. Journal of Small Business and Enterprise Development, 10(1), 50–61. https://doi.org/10.1108/14626001311298288
33. Tyebjee, T., & Bruno, A. V. (1981). Venture capital decision making: A preliminary result from three empirical studies. Frontiers of Entrepreneurial Research. Wellesley, MA: Babson College.
34. Wang, Y., & Xu, T. (2024). Venture capital investment strategies: The role of innovation in emerging markets. Journal of Business Venturing, 39(1), 1-15. https://doi.org/10.1016/j.jbusvent.2023.106376
35. Zhao, H., & Liu, Q. (2023). The influence of product innovation on venture capital investment decisions. Technovation, 119, 102–114. https://doi.org/10.1016/j.technovation.2022.10211
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright (c) 2026 Authors