Kenyan Tech Startups Raise Record Funding in 2022

Kenyan Tech Startups Raise Record Funding in 2022

Kenya is the continent’s second most popular investment destination, trailing only Nigeria. As of November 2022, the ecosystem funding stood at $506,686,000 spread across 63 transactions. This represents a significant increase and nearly doubles the $291, 983,000 raised in the Kenyan Startups in 2021, as well as a record annual total for the ecosystem, reflecting the growing interest in Kenya’s tech sector.

Furthermore, Disrupt Africa’s The Kenyan Tech Ecosystem Report 2022 pointed out that Between January 2015 and November 2022, 242 Kenyan tech startups raised $1,281,918,200 in total. However, the majority of funding for the ecosystem has come from outside of Kenya, with 80% of the total coming from outside of Kenya. This is consistent with the growing trend of foreign investment in Kenyan technology in recent years.

Moreover, in terms of activity, fin-tech is the leading sub-sector of the Kenyan startup space, accounting for nearly three times more than its nearest competitors. Agri-tech and e-health account for 10.1 percent of Kenyan startups, respectively, with e-commerce and retail-tech, recruitment and HR, and ed-tech coming in third, fourth, and fifth. Kenya’s startup ecosystem is extremely diverse, with ventures active in areas as diverse as mobility, logistics, agri-tech, marketing, prop-tech, legal-tech, waste management, and energy.

The largest deals in Kenyan tech have been on the rise in recent years, and despite fin-tech being the largest sector in terms of total funding and the number of startups operating within it, the largest disclosed round this year went to the energy company, M-KOPA Solar, which received $75 million in funding, which is still less than the $85 million raised by Gro Intelligence in 2021. Nonetheless, since 2016, when the largest disclosed round was worth less than $2 million, the ecosystem has come a long way.

Meanwhile, the fintech sector is a clear favorite among investors in other leading African startup ecosystems, and investment flows more evenly in Kenya. While fintech generally accounts for the lion’s share of funded ventures, a few sectors have come out on top in terms of total secured funding since 2015. Agri-tech and energy have received the most capital at various points, depending on whether Twiga Foods or M-KOPA Solar received a large round that year, while in 2022 e-commerce and retail tech have emerged as dominant forces.

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Kenyan Startups Attracted the 2nd Highest Number of Investors

According to the report, Between January 2015 and November 2022, Kenya attracted the second-highest number of investors of any African country, trailing only Nigeria. In less than eight years, 435 different individuals or entities invested in Kenyan technology startups. Nigeria had 641 investors in comparable periods, South Africa had 382, and Egypt had 203. Since 2015, the annual number of investors in Kenyan startups has increased at varying rates, with some years increasing by more than 100 percent and others increasing more steadily. After having risen and then fallen at various points between 2015 and 2018, growth has been accelerating since then, with more individuals or entities investing in 2022 than in 2021.

Despite being one of the more established African tech startup ecosystems, and in many ways a pioneer, Kenya lacks a local investment scene in comparison to Nigeria and South Africa. Nonetheless, Novastar Ventures and Chandaria Capital are notable, and their funding is supplemented by international capital. Pan-African early-stage investors, including Kepple Africa Ventures, DFS Lab, and Launch Africa, as well as institutional investors like DOB Equity and IFC, are active in the country.

Top 10 most active investors in Kenyan tech startups, 2015 – 2022

Kepple Africa Ventures 16

DFS Lab – 14

DOB Equity – 13

Launch Africa Ventures – 12

Musha Ventures – 11

Founders Factory Africa – 10

Chandaria Capital – 9

Future Africa – 8

Novastar Ventures – 10

Y Combinator – 10