those exempted). VCTF was set up as a fund of funds, seeding venture capital funds focused on investing in SMEs in Ghana. In addition, the Act elaborated the rules under which VCTF funding could be accessed: by venture capital funds incorporated under the Companies Code 1963 (179) investing in SMEs in Ghana through equity and quasi equity financing; the fund managers of these funds had to be registered with the Ghanaian capital markets authority, the Securities and Exchange Commission (SEC).

**Table 1:  VCTF Use of Funds**<sup>**26**</sup>

|**VCTF Investments**|**U$S millions**|
|---|---|
|Activity VFC|4.0|
|Bedrock VFC|4.0|
|Fidelity Fund II|3.0|
|Gold VFC|2.0|
|Ebankese Venture Fund|4.0|
|**Total Existing Co-Investments**|**17.0**|
|**VCTF Technical Assistance**|**2.0**|
|**Sorghum Project**|**2.0**|
|**Total Investments**|**21.0**|

# **VENTURE CAPITAL TRUST FUND: OPERATIONS AND CHALLENGES**

The VCTF Fund began operating in 2006 with Ghana cedi 22.4mn (US$22.4 million) in initial funding. VCTF’s role was primarily to play an anchor investor in domestic venture capital funds while educating domestic co-investors on the private equity/ venture capital asset class and building the capacity of domestic PE/VC managers. ( _See Box 1 below for details on VCTF’s structure._ ) Its function later evolved to also play a significant role in catalyzing the general ecosystem for PE/VC. Since venture capital funds need profitable and viable routes to exit their investee companies, the Venture Capital Trust Fund collaborated with the Ghana Stock Exchange (GSE) to create a dedicated junior stock market for SMEs and assist these SMEs to list their shares on the exchange. In 2009, VCTF created a subsidiary US$1million Angel Fund, with the goal to solicit funding from, and co-invest, with high net worth (HNWs) in early stage entrepreneurs, which VCTF was to manage through a service provider.<sup>27</sup> This Angel Fund was subsequently liquidated and in 2011 the VCTF established the Ghana Angel Investor Network (GAIN), to deepen the venture capital and private equity market in Ghana. GAIN, which currently has a network of 25 angels,<sup>28</sup> was to provide a platform for high net worth (HNW) individuals to invest in and nurture early-stage companies, which generally do not have access to traditional sources of capital. VCTF has also taken on a quasi-regulatory role, in supporting the SEC more recently to draft upcoming regulations and guidelines for the industry. While this role provides an interim solution until a permanent regulatory body is put in place, best practices would call for the creation of a more fulsome regulatory solution housed within an independent body. VCTF also finances various commodity value chain developments in Ghana, such as through the West Africa Sorghum Value Chain Development Project ( _see Table 1 above for the breakdown in VCTF use of funds_ ). In 2012, the Government of Ghana provided VCTF with an additional GHC5 million funding.

> 26 Final Portfolio Analysis of AVCF conducted by Glendale Consulting Ltd. May 2013.

> 27 This vehicle allowed the HNWs to get tax exemption.

> 28 From VCTF website, accessed October 16, 2015.

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