At least four notable homegrown tech start-ups have shut their doors this year, extending a trend since 2021 and shining a spotlight on the biting woes that the newbies continue to face.
The survival threats, which encompass factors such as financing deficits, sharp talent rivalry from multinational tech giants as well as a tough economic environment, have been cited by sector players as hurting the country’s much-publicised Silicon Savannah dream.
This year alone, sector start-ups that included Copia, Gro-Intelligence, iProcure, as well as MarketForce, have bowed out of the market either in full or in part, pointing to the continuing deterioration of the landscape.
Online e-commerce platform Copia is the latest casualty in the growing list after it commenced the process of winding up its operations in the country in September following a decade-long stay in business.
Earlier in May, the board of directors had placed the start-up in administration as they sought the preservation of the business amid prevailing upheavals at the time.
“Copia Global, the parent company of Copia Kenya, was unable to attract capital on terms that were amenable to all existing shareholders, funders, and investors. Copia Global is now winding down, leaving the Copia Kenya business in a new position to raise capital directly,” the firm said in a statement in May.
“The administration will work with management to raise capital from new investors for the Kenyan business.”
In September, the appointed administrators stepped up the sale of the firm’s assets after hopes of turning around its fortunes proved improbable, forcing the interim managers to wind up.
Before Copia, Kenyan-born agricultural data platform Gro Intelligence had announced in June that it would be closing shop following difficulty in securing sufficient capital to stay going.
The firm, which had in its final public fundraising in 2021 bagged $85 million (Sh10.99 billion at current exchange rates) in a series B round backed by Intel Capital and Africa Internet Ventures, was involved in collecting data from government, financial, trade, weather and geological agencies to provide actionable insights into agricultural companies.
In May, agritech startup iProcure, which was backed by Safaricom’s Spark Fund, filed for bankruptcy just days after it was placed under administration due to the piling of unpaid debts of undisclosed amounts.
Launched in 2013, iProcure had developed its own distribution infrastructure, connecting major agricultural input suppliers directly to local agro-dealers via its proprietary distribution technology system.
The startup had raised a total of $17.2 million (Sh2.2 billion) in debt and equity funding, including a $10.2 million (Sh1.3 billion) series B round in 2022, led by Investisseurs & Partenaires (I&P) with participation from Novastar Ventures, British International Investment (BII), and Ceniarth.
Homegrown e-commerce start-up MarketForce led the pack in April after it announced that it was shutting down its business-to-business (B2B) distribution business RejaReja citing razor-thin margins that it said had made it a struggle to attain profitability at a unit level.
In a blog post dated April 17, co-founder Tesh Mbaabu also attributed the move to the high elasticity of prices, which he said translated to constant price wars in the business segment.
“Unfortunately, that is our closing chapter. After immense efforts to make our business model sustainable, including downsizing the business to extend the runway for as long as possible, we have concluded that it is no longer feasible to keep RejaReja operational,” wrote Mr Mbaabu in the post at the time.
While MarketForce originally started off as a sales automation software in 2018, it later ventured to the B2B e-commerce RejaReja, a service that allowed neighbourhood merchants and small retailers to stock up their shops with fast-moving consumer goods (FMCGs).
This year’s shutdowns come after a flurry of startup collapses witnessed in the past two years, with a Business Daily analysis in September last year showing that at least eight Kenyan-born tech newbies had closed down within two years despite having raised close to Sh35 billion in collective investor funding.
Anza Now CEO Bobby Gadhia, whose initial tech firm PC World Limited collapsed in 2016 after being in the game for 21 years, told this publication in a past interview that the rapid collapses were chiefly driven by above-average ambitions by entrepreneurs.
“Most start-ups and entrepreneurs are emotional and over-optimistic about their business ideas. They start these ideas without proper planning and they are disillusioned by the success of Silicon Valley,” said Mr Gadhia.
“The tech sector is one of the most stressful and demanding that one can ever venture into. You have to possess balls of steel to navigate and survive. It is not for the faint-hearted.”
