Capital Markets

Kenyan start-ups get Sh91bn from VC funds

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Operating the chama assets in the names of the founders is very risky in as much as you trust them. FILE PHOTO | POOL

Kenyan start-ups got Sh91.4 billion from venture capital (VC) funds last year, defying a global decline in such funding and the closure of tech companies.

A new report by African Private Equity and Venture Capital Association (AVCA) titled Venture Capital in Africa shows Kenya received $676 million (Sh91.4 billion at current exchange rates), representing 13 percent of the total $5.2 billion raised in venture capital in the continent over the year.

The country also accounted for 102 deals out of the 786 in Africa.

Kenya ranked third in value of funding after US-headquartered and Nigeria start-ups which received $884 million and $780 million respectively, and ahead of Egypt ($676 million), South Africa ($520 million), Ghana ($208 million) and Algeria ($156 million).

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In terms of the number of deals, Kenya was ranked fourth behind Nigeria (172), Egypt (117) and South Africa (110).

The report shows that financials, industrials, information technology and consumer discretionary sectors in Africa accounted for the top value in the VC deals, with investor interest still inclined to start-ups with a multi-region geographic footprint.

“Multi-region deals not only comprised the largest share of venture debt deal value, but they also received the largest share by volume. East (25 percent) and West Africa (21 percent) were particular hubs for venture debt deal activity in 2022,” said Avca.

“This was driven by startups headquartered in Kenya and Uganda in the East, while startups headquartered in Nigeria, Senegal and Cote d’Ivoire led the charge of venture debt deal activity in the West.”

Solar home system provider, d.light, received the largest amount in VC funding at $238 million (Sh32.1 billion) from VC firms while Bboxx – a cleantech company that designs, manufactures, and distributes solar systems across sub-Saharan Africa—received Sh1.6 billion ($15 million) in local currency debt from SBM Bank in February 2022 to finance affordable solar home systems for nearly half a million Kenyans.

Other Kenyan start-ups that attracted early-stage investment include an e-logistics startup for trucks, Amitruck which got $4.8 million seed round funding; Kukua, a Kenyan educational entertainment company that received $6 million Series A funding and Wasoko also received $125 million series B funding.

Others include Pezesha which received pre-series A funding of $11 million; Lami, which received seed funding of $5.5 million and Powered by People which received seed funding of $5 million.

Read: Venture capital beats private equity in new deals

The VC financing deals came amid closures of start-ups and tech-related job cuts in 2022 due to a number of threats, including lack of additional financing, post-pandemic woes and a tough economic environment.

At least six Kenya-based start-ups closed shop or made partial exits in 2022, including electric vehicle (EV) taxi brand Nopea, Kune Foods, Notify Logistics, Sky Garden and We Farm, despite their rosy start and promising outlook.

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