Venture Capital in Rwanda: The Finance Gap for Startups and Role of Institutional Theory

Alexandra Lindahl

Student thesis: Master thesis


The entrepreneurial landscape in Rwanda has prospered over the last decade where startups have taken on some of the greatest challenges of the country. Nonetheless, access to capital continuous to be one of the most prominent hurdles challenging the development of the Rwandan entrepreneurial ecosystem. Venture capital has been set forth as a viable concept to combat capital constraints given their efficient flow of risk finance. Nonetheless, despite an increased interest from foreign venture capitalists in the Rwandan market, the funding challenges persist. Hence, through an abductive approach and explorative research design, the thesis aims to investigate the bottlenecks for Rwandan early-stage startups to obtain foreign venture capital funding. Furthermore, serves to develop an investment readiness program aiming to combat the experienced bottlenecks. The thesis draws upon a combined theoretical framework derived from the Venture Capital Process, Institutional Theory and Investment Readiness Programs. Primary data is collected through field research with semi-structured interviews, deploying a multiple case-study with a total of six interviewees from incubators, accelerators, entrepreneurs and impact funds, with both local and foreign heritage. The key findings of the bottlenecks are a lack of investment readiness from the entrepreneurs stemming from a knowledge gap and lack of data and statistics. Furthermore, the market is characterized by a low-quality deal flow, which entails higher costs for VCs and thus challenges the attractiveness of local startups. Moreover, that cross-border scaling potential is essential, which is challenging due to institutional barriers, cultural differences and access to market data in neighboring countries. Finally, that a cultural dissonance between foreign investors and local entrepreneurs, on trust, humbleness and confrontational issues, create hurdles during the investment process. The developed investment readiness program serves to combat the hurdles through capacity building, impact consulting from Nordic students and training entrepreneurs in pitching to foreign investors with a cultural adherence deviating from the Rwandan humbleness and non-confrontational notion.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2021
Number of pages150
SupervisorsMaximilian Schellmann