Funding of Kenyan tech startups increases to Sh71 billion in 2022


M-KOPA Solar kit and a digital solar-powered TV. FILE PHOTO | NMG

Kenyan tech start-ups received a total funding of $574.8 million (Sh71.7 billion) last year, representing a near doubling from $292 million (Sh36.4 billion) in 2021.

The country’s 91 startups got the third-largest capital inflow in Africa in the review period at 17.2 percent of the total new funding recorded in the continent.

The African Tech Startups Funding Report released by research firm Disrupt Africa shows the number of funded technology startups in the country rose marginally by 4.6 percent compared to 2021.

In 2020, the total amount raised by Kenya-based firms stood at $191.4 million (Sh23.9 billion), up from $149.1 million (Sh18.6 billion) in 2019.

“In terms of the number of funded ventures, fintech was the leading space, with 26 startups backed (28.6 percent). E-commerce and retail-tech was in second place with 16 startups (17.6 percent). The e-health, energy, and logistics sectors all performed relatively well also,” the report says.

According to the report, the country’s average investment size was $6.3 million (Sh786.2 million) up from $3.4 million (Sh424.3 million) in 2021.

“The number of rounds in excess of $1 million (Sh124.8 million) also paints a pleasing picture in Kenya, and has risen substantially over the years as confidence in the country’s ecosystem booms. In 2022, there were 49 such rounds, up from 35 the previous year,” the report reads in part.

The report disclosed that the overall funding for African tech startups hit $3 billion for the first time during the year under review with 633 beneficiaries underscoring the resilience of firms to withstand global financial headwinds.

This represented a 12.2 percent hike in the number of funded firms and a 55.1 percent rise in value of secured funding compared to 2021.

In Kenya, M-Kopa Solar bagged the largest funding last year amounting to $75 million (9.4 billion) compared to the $85 million (10.6 billion) raised by Gro Intelligence in 2021.

While funding for startups grew overall, several firms collapsed last year after failing to get additional capital to keep them afloat.

By October last year, at least six promising tech newbies had collapsed in quick succession with most of them citing difficult market conditions and funding hitches.

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