Kenya’s start-up ecosystem has recently seen notable funding success, with USD 81.0 million (KES 11.4 billion) secured in the first two months of 2024.
This contribution adds to the nearly USD 300 million (KES 42.2 billion) amassed by African start-ups during the same period. Kenya holds the second position in this funding race, trailing behind Nigeria, which claimed 42 percent of the total funding.
Breaking down the figures, the Logistics and Transport sector emerged as the frontrunner, attracting nearly half of the total funding. The Healthcare, Fintech, and Energy sectors also garnered significant attention, reflecting a diverse landscape of innovation.
Behind these numbers lie the stories of 80 Kenyan start-ups that successfully raised at least USD 100,000 (KES 14.1 million), demonstrating resilience and ingenuity. Notably, Fintech ventures stood out, with 18 start-ups representing 23 percent of the total, underscoring Kenya’s prowess in financial technology.
However, this celebration is tempered by a nuanced reality. The total funding for January and February 2024, although substantial, falls short of figures from the corresponding period over the past four years. Despite 38 start-ups securing USD 1 million (KES 140.8 million) or more, uncertainty looms over the outlook for the remainder of 2024.
Max Cuvellier Giacomelli, Head of Mobile for Development (M4D) at GSMA, presented two scenarios for the year’s funding outlook. In an optimistic scenario akin to 2021, where January and February constituted only 9 percent of the total annual funding, Kenyan start-ups could potentially amass USD 3.2 billion (KES 450.4 billion) by year-end. Conversely, a more conservative estimate aligning with the average pattern from 2019 to 2023 suggests a more modest USD 1.4 billion (KES 197.1 billion).
African start-ups confront a challenging fundraising landscape. According to Disrupt Africa’s African Tech Startups Funding Report, investment in these ventures declined by approximately 27 percent in 2023, accompanied by a 50 percent reduction in the number of investors. Despite leading in funding with USD 800 million (KES 112.6 billion) in 2023, Kenyan start-ups are not immune to these shifting dynamics.
Furthermore, experts from Founders Factory Africa anticipate a further decline in funding this year, underscoring the stricter stance of investors. They urge start-ups to prioritize fundamentals, sustainability, and realistic growth plans. June Odongo, CEO of Senga Technologies, emphasized the importance of thorough due diligence from an investor’s perspective to mitigate unexpected surprises during investment.
