Start-Up Capital Source and Organizational Performance of Agro-Businesses in Edo State, Nigeria

This study examined start-up capital source and organizational performance of agro-businesses in Edo State, Nigeria. It investigated the influence of start-up capital sources—specifically equity and debt financing—on organizational performance, measured through operational efficiency and return on investment. The aim was to determine how different financing structures affect performance outcomes among agro-businesses in Edo State. A quantitative, cross-sectional survey design was adopted. A sample of 201 was determined from a population of 420 registered agro-businesses in the state. Stratified random sampling was employed to ensure representation across crop farming, livestock, aquaculture, and agro-processing sectors. Structured questionnaires were administered to business owners and financial managers to collect data on financing sources and performance metrics. Out of 201 distributed questionnaires, 189 were returned, and 176 were valid for analysis. Data were analysed using Partial Least Squares - Structural Equation Modelling (PLS-SEM) via SmartPLS version 4.0. The findings revealed that both equity and debt financing significantly influence operational efficiency and return on investment, with equity financing showing slightly stronger effects. The study concludes that financing choices play a critical role in shaping the performance of agro-businesses. It recommends that entrepreneurs prioritize equity financing for operational flexibility and reinvestment potential, while using debt strategically for revenue-generating activities aligned with repayment capacity.