Startups urged to position themselves for funding from investors

Startups are being urged to come up with strategies to attract capital funding from investors to expand their business.

Muthuri Kinyamu, programme coordinator for Hong Kong-based venture capital firm Nest, says the ongoing interest by global companies in Nairobi provides a good opportunity for businesses to position themselves to receive funding.

“Nairobi is the launch pad for a lot of global companies who want to expand into the region. We have so many investor’s funders and big corporates who have set up shop and who can provide much needed capital,” he said.

Nest opened its Africa offices in Nairobi in July looking for startups across the continent that are ready for additional funding for expansion.

It is particularly searching for businesses that offer services to the mass or the lower end of the market. The company recently invested close to Sh13 million in startup Ongair.

Mr Kinyamu says startups should focus on the scalability of their business rather than just having a local perspective.

“From the onset, entrepreneurs need to take a pan African and a global view of what they are trying to build. We see so many Nigerian and South African startups looking to expand into Nairobi but very few Kenyan firms think of how their business can be scaled to other parts,” he said.

According to a report released last week, Kenyan technology startups were among those able to raise capital funding throughout the continent amounting to about $186 million (Sh18.6 billion).

The report by Disrupt Africa showed that Kenyan businesses are among the third most funded in the region, preceded by Nigeria and South Africa.

Disrupt Africa is a one-stop portal for the continent’s tech startups providing news, information and commentary pertaining to the continent’s tech startups and investment ecosystem.

The Disrupt Africa African Tech Startups Funding Report 2015, showed that Kenyan technology based businesses accounted for 14.4 per cent of the $185,785,500 raised by 125 startups on the continent.

Kenyan tech startups were able to raise $47,365,000, with Mkopa, BRCK, Kopo Kopo Angaza and Asoko insight listed as among the top listed startups to be funded.

South Africa received 36 per cent of the total funding ($54,568,000) while Nigeria received 24 per cent ($49,404,000) though the report shows that Kenya and Nigeria had larger average funding per startup.

Startups that dealt with the solar sector accounted for 32.9 per cent of all the funds raised, with the financial technology sector coming in second to receive 29.6 per cent of the funds.

Tech startups in Tanzania Egypt and Ghana also attracted a lot of attention from investors.

Another report released at the end of last year by Burbidge Capital showed that the  country had attracted over Sh102 billion ($1 billion) in private equity (PE), impact investment and venture fund deals in the first eight months of 2015.

Financiers were buying into or lending to energy, financial, healthcare and real estate companies.