Kenya’s Vibrant Internet Footprint Boosts Startups – Report

Kenya’s vibrant internet footprint, high mobile phone penetration, and youthful human resources make it a preferred startup ecosystem in the continent.

According to the most recent study on the country’s investment environment by Kenyatta University and Maitri Capital, the $8.7 billion retail market presents numerous possibilities for investors.

The country has a 90% internet penetration rate, a rich profile of B2C e-commerce merchants, and a mobile penetration rate of over 100%, which lowers business costs.

242 tech startups raised $1.28 billion between January 2015 and November 2022.

They raised $506.6 million in one year, a record amount for the ecosystem, and nearly doubles the $291.9 million they collected in 2021.

“Kenya has a well-established reputation as a pioneer in Africa’s tech space, as the home of the likes of M-Pesa, Ushahidi, and the iHub,” the survey reads in part.

According to the study, which mapped 47 counties, 58% of Kenya’s startups are based in Nairobi and have been branching out to other parts of the country.

Even though 53% of them are active in Kenya, there is increasing interest in expanding to other countries in East Africa as well as West African countries. 91% of the startups that participated in the poll have attempted to find investors for funding.

Only 6% of the startups are funded by their own money, and 3% did not respond.

97% of the 33 startups that attempted to generate capital were successful in doing so through various channels, including loans, investments, and grants. Only startups were acquired or combined with an existing business.

According to the study, most startups find it difficult to raise capital from investors.

The study showed that 97% of startups found it difficult to obtain funding, while only 3% did so easily.

The majority of startups (65%) seek investments in return for a share of the company, while some (15%) seek a combination of loans and investments, and others (12%) seek only loans. Only a few (8%) are searching for grants or safe notes.

The startup ecosystem in Kenya has advanced significantly over the past ten years, with real development starting in 2016 and accelerating in 2020–2022.

With 93 firms making up 30.2% of Kenya’s ventures, fintech is the most active sub-sector of the country’s start-up scene in terms of activity, further demonstrating its capacity to address pressing issues at a time when technological solutions are widely accepted and rapidly adopted.

Over 11,000 individuals were employed by at least 308 tech start-ups operating in Kenya last year.

“The combination of a vibrant economy, Kenyans’ willingness to try new and better solutions, resilience during difficult times like Covid-19, and a rapidly growing talent pool within the ecosystem make it one of the most attractive on the continent, if not globally,” Poonam Vora of Maitri Capital Ltd said.

This, he continues, is demonstrated by entrepreneurs setting up shop in Kenya and foreign investors considering making investments there.

To advance further, Kenyan startups will need to do more work to involve local business executives, the corporate sector, the academic community, and the government.