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Why few startups scale despite creating 80pc new tech jobs
Guests visit exhibition tents during the 3rd Latitude59 Kenya Edition, Estonia’s flagship startup and tech event, held at the A.S.K Dome in Nairobi on December 4, 2025.
As Kenya’s job market becomes increasingly crowded, fast-growing startups are emerging as critical engines of employment in the tech industry. Yet limited State support risks slowing the growth of the companies that create the most jobs.
The fast-growing companies now account for 80 percent of all new jobs created in Kenya annually, but account for just 15 percent of all companies, according to a new study by Endeavor Insight, a research affiliate of entrepreneurs’ network organisation Endeavor.
The study, Mapping the Kenyan Entrepreneurship Network report is based on interviews with more than 100 founders and data on over 730 companies operating in the country.
But their contribution to the economy through job-creation is barely recognised or incentivised, undermining their potential and limiting their impact in helping the fight against skyrocketing unemployment in the country, the study reveals.
“Kenya already enjoys the recognition of being the ‘silicon savannah’, where technology, talent, and a dynamic entrepreneurial culture live,” said Maryanne Ochola, managing director of Endeavor Kenya.
“It’s time we push the narrative beyond startup success to include scale-up success by doubling down on high-growth firms. I look forward to having this data inform targeted policies for this category of Kenya’s entrepreneurs.”
This concentration of job creation suggests that Kenya’s economic growth may depend less on the sheer number of startups launched and more on whether a small group of them successfully scale.
Kenya’s policy discussions have for years focused on promoting entrepreneurship broadly, often grouping startups together with small and medium-sized enterprises (SMEs). But the report argues that this approach overlooks a distinct category of companies capable of generating outsized economic impact.
Most SMEs remain small and informal, while startups typically create jobs gradually as they expand. In contrast, high-growth companies tend to generate more structured roles, higher wages and long-term career opportunities.
These firms are also more productive and play a central role in innovation. By developing new technologies and business models, they often transform traditional industries and stimulate growth across the wider economy.
Kenya’s tech ecosystem has grown rapidly over the past decade. The number of tech firms nearly tripled between 2014 and 2024, driven by sectors such as fintech, e-commerce, healthtech and software services.
But despite this expansion, only a relatively small share of startups successfully transition into high-growth companies.
Average scale-up time
One reason for the limited number of scaled firms is that building a large startup takes time. According to the report, the average Kenyan company requires around 10 years to reach scale, defined as employing at least 50 workers.
This timeline has important implications for policy. Proposed amendments to Kenya’s Startup Bill define startups as companies that have existed for no more than 10 years, which could unintentionally exclude firms just as they reach the stage where they begin to create significant employment.
By focusing on early-stage ventures, policymakers may be missing an opportunity to support the businesses most capable of driving long-term economic growth.
“Continuing to group high-growth companies with small and medium-sized enterprises in policies and support programmes overlooks the distinctive benefits that scaling companies provide,” the study noted.
Unlike many small businesses that rely on informal labour, scaling companies typically offer structured employment, higher wages and professional development opportunities. These jobs contribute to building long-term skills in the workforce and improving overall productivity.
Many of these firms also expand beyond the domestic market. The study found that about 82 percent of high-growth founders sell products or services internationally, compared with 50 percent of founders running smaller companies.
This global reach helps attract foreign investment and integrates Kenyan companies into international value chains, further amplifying their economic impact.
Another key finding is that high-growth companies often act as incubators for the next generation of entrepreneurs.
Employees who gain experience in successful startups frequently go on to launch their own businesses, while founders themselves mentor younger entrepreneurs or provide angel investment. This process creates what the report describes as a “multiplier effect,” in which one successful company helps generate many more.
The research found that founders of scaled companies are 1.5 times more likely to receive mentorship or early investment from other founders than those running smaller startups. They are also more likely to offer mentorship and capital to new entrepreneurs, strengthening the broader ecosystem.
Even when startups fail, their influence can persist through the skills, networks and companies created by former employees and founders.
