Kenya Attracts $634M in Startup Funding, Highest in Africa

Kenya attracted Ksh82.5 billion (USD 634 million) in startup funding in 2024, reaffirming its position as Africa’s top destination for venture capital, according to the Kenya Innovation Outlook 2024 report. This accounted for 29% of all startup capital raised across the continent, ahead of Nigeria, Egypt, and South Africa.

The funding boom was driven largely by big-ticket investments in climate tech firms such as d.light, SunCulture, and BasiGo. In East Africa, total startup funding stood at Ksh93.8 billion (USD 721 million), with Kenya accounting for a commanding 88% of that amount.

While the influx of capital underscores Kenya’s growing appeal as a tech and innovation hub, the report highlights several underlying weaknesses. Notably, 81% of the funding came from foreign investors, raising concerns about the ecosystem’s long-term sustainability.

“The Kenya Innovation Outlook is a mirror and a map. It shows our ecosystem’s growing maturity and guides our next steps toward an inclusive and globally competitive innovation economy,” said Tonny Omwansa, CEO of the Kenya National Innovation Agency (KeNIA), during the report launch.

He cautioned that while foreign investment is helping to scale startups, it also introduces risks: “Foreign investors often impose short-term expectations and exit strategies that may not align with Kenya’s broader economic development priorities.”

The report warns that reliance on external capital makes local startups vulnerable to global market volatility. It also points to the absence of robust domestic investment mechanisms as a critical gap limiting sustainable growth.

Another pressing issue is the concentration of innovation activity in Nairobi, where more than 75% of business development service providers are based. This centralisation, the report argues, marginalises startups outside the capital.

“This outlook confirms that ecosystems flourish when they are collaborative, decentralised, and inclusive,” said Ian Lorenzen, Executive Director of GrowthAfrica.

Gender disparities remain a challenge, with women-led startups securing just 12% of total funding in 2024. The report attributes this to structural barriers in accessing capital, mentorship, and markets.

Compounding these challenges is the stalled Startup Bill, which aims to formalise the sector’s regulatory framework. Its delay continues to create uncertainty, discouraging long-term local investment and leaving entrepreneurs to navigate a fragmented policy environment.