Kenyan tech startups shatter funding records according to new report

Kenyan tech startups shatter funding records
Start-ups Network At Africa Tech Summit Nairobi

Kenyan tech startups have higher rates of acceleration and are more diverse than their fellow tier one startup ecosystems, and are raising more funding than ever before.

That is according to the Kenyan Startup Ecosystem Report 2022, released by startup-focused news and research company Disrupt Africa.

The publication takes as its starting point a list of 308 Kenyan tech startups for which enough data was available. Nairobi is the leading hub for Kenyan tech, with 97.4 per cent of the startups tracked by this report based out of the city, while fintech is the leading sub-sector, with 93 (30.2%) of the startups active in this space.

Fifty-five (17.9%) of Kenyan tech startups have at least one female founder, and just short of half have taken place in some form of accelerator or incubator programme, both figures that are better than fellow tier one ecosystems Egypt, Nigeria and South Africa. The 308 startups tracked here employ between them just short of 11,500 people.

Kenya is the second most popular investment destination on the continent after Nigeria, according to the publication. Between January 2015 and November 2022, 242 tech startups raised a combined US$1,281,918,200. So far in 2022, 63 Kenyan startups have raised funding, with the country’s running total for the year standing at US$506,686,000. This is approaching double the US$291,983,000 raised by Kenyan startups in 2021, and represents a record annual total for the ecosystem. 

“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, but its journey has been far from smooth. This report tells the story of the country’s startup ecosystem and its development since 2015, with record levels of funding now flooding into Kenyan tech companies,” said Gabriella Mulligan, co-founder of Disrupt Africa.

“It is core to our identity as a company that we offer entrepreneurs – both active and aspiring – access to pivotal information, resources and opportunities with which to take their businesses to scale. The democratisation of data, and the release of detailed industry reports free of charge, is central to that, and with that in mind we hugely appreciate the assistance of all our partners, who are doing their bit to ensure this report reaches as many people as possible,” said Tom Jackson, co-founder of Disrupt Africa.

The Kenyan Startup Ecosystem Report 2022, its 19th publication and fourth country-focused report, utilises Disrupt Africa’s datasets, expertise and networks to document what startups are doing what in the country, who is making investments, and who is providing ecosystem support. It also includes the full list of startups tracked for the purposes of the report.

To do so, it has teamed up with various partners, including Quona Capital, a venture firm focused on fintech in emerging markets; NEAR Kenya, a regional hub supporting and representing the African community building disruptive technology on NEAR Protocol; and MarketForce, a technology company that is building the operating system for retail distribution in Africa. Other partners are Newtown Partners, Enza Capital, Cellulant, and AAIC Investment.

“As a venture capital firm firmly invested in the success of African startups, Quona is pleased to support Disrupt Africa’s endeavour to make this informative report freely available to the broader ecosystem,” said Kofoworola Agbaje, senior investment associate at Quona Capital. “Kenya’s fintech startup scene has created some phenomenal innovations already, and we’re delighted to see more investment flow into the region.”

“NEAR Kenya is delighted to partner Disrupt Africa to help shine a light on the exciting Kenyan startup space, and its developing blockchain ecosystem in particular. We are sure the Kenyan Startup Ecosystem Report will provide vital insights to anyone considering launching or investing in a tech startup in the country,” said Kevin Imani, CEO of NEAR Kenya.

“MarketForce is delighted to partner with Disrupt Africa on this deep-dive into the Kenyan startup ecosystem. Kenya is the heart of the Silicon Savannah, with the third fastest-growing annual GDP in Sub-Saharan Africa and the largest economy in East and Central Africa. At MarketForce, we are proud to call Kenya home and look forward to sharing our experience as operators in the Kenyan e-commerce and retail distribution scene. I hope that the lessons we have gathered so far will provide useful insights to anyone looking to get involved,” said Tesh Mbaabu, CEO of MarketForce.

“Kenya is the leading hub for technology startups in Eastern Africa and holds exciting opportunities for the future. As an active investor in Kenya, we are eager to see the advancement of the Kenyan tech ecosystem through knowledge-sharing and collaboration between local and international players. We are therefore delighted to support this initiative by Disrupt Africa to make this ecosystem report freely available to all stakeholders,” said Newtown Partners managing partner Llew Claasen.

“As a pan-African investor, Enza Capital is acutely aware of the key role each ecosystem plays in the broader development of the continent. Given our Nairobi headquarters, we are pleased to support this report and its efforts to highlight the great work being done here. We continue to support portfolio companies from across the continent to expand here and work with our companies to grow into new markets in the East African region and across Africa,” said Mike Mompi, CEO of Enza Capital.

“Kenya’s growing economy is home to the most resilient and innovative startups in Africa. These startups, solving problems common to Africa as they are in Kenya, cannot scale if making and receiving payments is an arduous task. Here at Cellulant, our payment rails enable global and local businesses to accept and make payments easily paving the way for their growth. Anchored by our mission of accelerating economic growth for all of Africa, we’re proud to partner with Disrupt Africa in this insightful report that shines a light on Kenya’s pioneering ecosystem,” said Akshay Grover, Group CEO at Cellulant. 

“We are happy to partner with Disrupt Africa because of their independent journalism which is characterised by integrity and consistency. Their contribution to the startup ecosystem in Africa has been invaluable and we are happy to be aligned with such a company which gives back to the ecosystem,” said Hiroki Ishida, director of AAIC Partners Africa Limited.

The Kenyan Startup Ecosystem Report 2022 is available to all for free, making the data and analysis contained in its pages accessible to those for whom the information is most valuable – entrepreneurs.

The publication, which is the 19th released by Disrupt Research, is over 50 pages in length and provides a detailed overview of the Kenyan startup ecosystem and its development over the last 5-10 years. It involves analysis as to what areas startups are active in, a detailed look at funding and M&A trends, and detail the range of startup support services available to Kenyan entrepreneurs, including hubs, incubators, accelerators, and government, corporate and university initiatives.

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