Kenyan start-ups defy pandemic, raise Sh19b
Report shows the country beat Nigeria, South Africa to emerge the continent’s biggest startup investment destination this year.
Kenya beat Nigeria and South Africa to attract the highest startup funding this year despite the Covid-19 pandemic, according to a new report.
Kenya’s top 10 startup investment funding totalled Sh19 billion compared to Sh17 billion and Sh15 billion for Nigeria and South Africa in that order.
“The most common destinations for African Startup Investment was Nairobi and Lagos.
They account for more than half of all investment deals made in African Startups 2020,” notes the Startup list Africa report.
Three Kenyan startups were in the top 10 largest funding deals on the continent. These include logistics company Sendy which attracted Sh2 billion.
Others are renewable energy startup Greenlight Planet which attracted Sh9 billion while agriculture startup Komaza bagged Sh2.8 billion.
Third quarter
Music sharing platform Mdundo, Solarise Africa, Komaza and Greenlight Africa all Kenyan startups signed the top 10 key funding deals in the third quarter of 2020.
Renewable energy and healthcare startups overtook fintech’s to become the main beneficiaries as investors sought to diversify their portfolios.
Total funding to Africa’s startups has risen from Sh4.8 billion in 2015 to Sh26.8 billion in 2020.
“Kenya is attracting good money but we have few good founders compared to Nigeria, we need to work on our capacity,” said Sam Gichuru, founder of Nailab.
The report captures startup funding for the 10 months to October 2020.
So far in 2020, Series A rounds accounts for the most 27 per cent deals compared to other rounds.
In the third quarter, however, private equity rounds were the order of the quarter.
The total number of deals in Africa however declined from 50 last year to 38 in 2020 due to the pandemic.
Two thirds of the deals were either pre-seed, seed or pre-series A. This category attracted Sh5.6 billion.
They were done in Egypt, Kenya, Nigeria, South Africa and Tunisia. Series A deals were worth Sh20 billion in Kenya, South Africa, Nigeria, Ghana and Egypt.
Series B deals worth Sh15 billion were closed in Kenya, Nigeria, Egypt and Ghana while series C deals totalling Sh2.2 billion were closed in Kenya and Ghana. Series D funding rounds were only in Egypt and South Africa.
Foreign founders
Lack of startup funding, high cost of doing business are key factors facing African entrepreneurs.
The local startups system is struggling from lack of local angel investors which gives foreign founders a head start.
New recommendations in the BBI report seek to give startups a seven-year tax free period which could be a major boost to founders across the World seeking to start a Pan Africa company.
