Kenya leads Africa in startup funding, attracting Ksh.82.5B in 2024

The report highlights that East Africa, led by Kenya, has consistently attracted the most funding for two consecutive years, with Ksh.93.5 billion secured in 2024. Of this, 88% was directed towards Kenyan startups, further cementing the country’s position as a regional hub for innovation and entrepreneurship.

Kenya's vibrant tech ecosystem, often referred to as “Silicon Savannah,” is a major driver of this success. Funding was particularly concentrated in sectors such as fintech, climate tech, electric mobility, insurance, internet services, health tech, e-commerce, and artificial intelligence (AI).

These sectors are tapping into Kenya’s high internet penetration, a young, tech-savvy demographic, and a strong culture of entrepreneurship.

Kenya’s diverse and resilient economy has positioned the country as the top destination for startups in Africa, surpassing regional giants such as Nigeria, South Africa, and Egypt. The “Big Four” startup markets—Kenya, Nigeria, South Africa, and Egypt—accounted for 84% of all startup funding in Africa in 2024.

While the funding numbers are impressive, the report also notes a year-on-year decline in the value and volume of startup deals compared to 2023. This decline is largely attributed to global macroeconomic instability, with a funding slowdown observed worldwide in the first half of 2024.

Kenyan startups face unique challenges that include commercial viability issues, poor corporate governance structures, and unsustainable business models. These factors have contributed to closures and downsizing, resulting in significant layoffs.

One notable example is Copia, an e-commerce platform that had raised over $100 million, but faced financial difficulties that led to a downsizing of its operations.

In addition to these challenges, there are calls for government intervention to improve the business environment. Key areas of concern include the need for predictable and equitable taxation policies, simplifying regulatory compliance, and reducing energy costs to promote industrialization.

The high cost of energy, coupled with inflation and punitive taxation, has eroded consumer purchasing power and discouraged investors.

On a macroeconomic level, experts anticipate that the Central Bank will continue cutting interest rates to ease the cost of capital, which remains prohibitively high. While global inflation has largely been contained, making conditions more favorable, Kenya’s economic policies will need to further support business growth.

Despite these hurdles, there is significant potential for local entrepreneurs, particularly in the agriculture sector, which remains the largest employer in Kenya. The AgriTech ecosystem is still largely untapped, and investors have an opportunity to capitalize on this growing market.

For investors, venture capital in startups remains a high-risk, illiquid, and long-term investment. Due diligence and patience are essential when committing capital, as startup growth and profitability can take years to materialize. However, the long-term rewards can be substantial for those willing to navigate the risks.

Looking ahead to 2025, projections for Kenya’s startup funding remain positive, with the last few months of 2024 showing a steady increase in both the value and volume of deals. Kenyan startups are poised for continued growth, with many outgrowing incubators and moving toward potential unicorn status.

Kenya’s creativity and innovation, exemplified by the success of platforms like M-Pesa, a mobile money solution, continue to make the country a beacon of entrepreneurial achievement in Africa.

As more startups emerge, there is a growing need to celebrate and nurture entrepreneurs by providing a conducive environment for unlocking financing and enabling sustainable growth across the Kenyan market.