The Relationship between Venture Capital Dimensions and Innovation Performance among Start-Ups in the Eastern Cape

Abstract

This study investigates the associations between venture capital dimensions and start-up innovation performance in the Eastern Cape, South Africa, with a specific focus on financial resources, investor expertise, VC-enabled research and development (R&D) investment, networking and partnerships, and market access support. Drawing on the Resource-Based View (RBV), Knowledge-Based View (KBV), and Triple Helix Model of Innovation, the study conceptualises venture capital as a multidimensional construct comprising financial, knowledge-based, and relational support mechanisms associated with firms’ innovation capabilities. A quantitative cross-sectional research design was employed, and data were collected from 385 start-up founders, owners, and managers in the Eastern Cape using a structured questionnaire. The data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) using SmartPLS 4. The findings revealed that Market Access Support (β = 0.503, p < 0.001) and Networking and Partnerships (β = 0.163, p < 0.05) were significantly associated with Start-up Innovation Performance, whereas Financial Resources, Investor Expertise, and VC-enabled R&D Investment demonstrated no statistically significant relationships. The findings suggest that non-financial venture capital dimensions, particularly relational and market-oriented support mechanisms, are more strongly associated with innovation performance than financial and knowledge-based inputs within this sample of Eastern Cape start-ups. Due to the cross-sectional and convenience sampling design, the findings should be interpreted as associative rather than causal and should therefore not be statistically generalised beyond the study sample. The study contributes to the literature by providing a multidimensional perspective on venture capital and offering practical insights for entrepreneurs, investors, and policymakers in emerging economy contexts seeking to strengthen innovation ecosystems in resource-constrained regions.