Country Guide

Kenya

Kenya
Nekesa Were

Guest Editor

Nekesa Were

Managing Director at iHub

Nekesa Were is the Managing Director at the iHub, Kenya’s premier hackerspace and innovation hub. She also sits on the boards of Afrilabs, a Pan African network of over 150 hubs, and Creatives Garage, a multidisciplinary space for creatives. Nekesa currently focuses on fostering iHub partnerships and increasing the number of women benefitting from iHub programs.

Guest editors are local ecosystem leaders: successful founders, investors, or thought leaders. Have someone in mind? Nominate a country guest editor.

Disclaimer: all content within the Startup Ecosystem Summary and Editor’s Guide sections is written by and reflects the personal perspective of the guest editor. The guest editor is not responsible for content within the Country Snapshot and Community sections, as much of this content is compiled from external sources and does not necessarily reflect the guest editor’s view.

Startup ecosystem summary

Key Startup Cities

Nairobi, Kisumu, Mombasa

Connected Country Ecosystems

Nigeria, South Africa, Rwanda, Ethiopia, Egypt

Differentiators

  • Kenya has a growing middle class and is one of the most advanced economies in Africa
  • One of the earliest adopters of undersea cable technology which brought the price of connectivity down
  • The epicenter of mobile money technology with the launch of mobile payments startup M-Pesa

Challenges

  • Process challenges: tax management, cash flow management, people management. More attention is paid to problem solving, and not enough to process management

Editor's Guide

Introduction

The Kenyan ecosystem is robust, with entrepreneurs building solutions for their communities that they want to scale across the globe. There are several training and funding opportunities available to these entrepreneurs that are run by incubators and accelerators across the country. There are also several regular opportunities to engage entrepreneurs building sector specific solutions, or engage with public or private sector players to talk through opportunities available to local entrepreneurs. Finally, there are opportunities for entrepreneurs to get involved in shaping policy and ensure that they are startup friendly. As a result of these opportunities, entrepreneurs in Kenya enjoy more ease of doing business than in several other countries.

On the flip side, with many private and public sector players, the ecosystem has become disjointed with lots of replication across the board. Public and private sector actors are quick to set up new hubs and programs without taking full advantage of already existing infrastructure and resources. Opportunities for collaboration are bypassed in favour of duplication of programs and consequently funds that should ultimately support entrepreneurs are spread thin.

Outlook

Kenya recently celebrated the launch of the Association of Startup and SME Enablers of Kenya (ASSEK), an association established to represent the interests of organisations supporting the development and growth of startups and SMEs for maximum impact of such activities. This has awakened renewed interest in the entrepreneurship ecosystem from large corporates, state missions and national government, and this in turn has brought with it new opportunities for collaboration, development of skills and funding. If we successfully implement this community approach across the country, Kenya will see increased numbers of scalable solutions coming from all parts of the country as well as faster, more impactful policy influence as entrepreneurship support organizations begin to speak in one voice.

For this to happen, larger corporate organizations will need to plug into the ecosystem more through mentorship and business scaling advice, entrepreneurs will need to better learn how to interact with a government that will be critical of their product or service delivery, and the government will need to consolidate, map out, and communicate better its efforts to support entrepreneurs. There will have to be more deliberate efforts from all members of the local ecosystem to work together.

With this cooperation in place, Kenya will have strategically positioning herself for the 4th industrial revolution as seen by the establishment of the government taskforce on blockchain and AI.

Focus Industries

Editor’s choice of the industries with the most potential for technology disruption and growth.

AgtechThe agriculture space is being disrupted constantly to meet the demands for quality and quantity food production. Key innovations focus on boosting crop yield, accessing climate predictions, soil weed and disease sensing, increasing nutritional value, increasing markets for small-holder farmers, post-harvest storage, farm to fork tracking and convenient delivery of produce from farms to consumers.
FintechThe financial access space has been disrupted by several products looking to reach the unbanked or offer alternate, more easily accessible financing options presented as products to promote financial inclusion through savings and credit services. Financial literacy has become key with statistics showing a significant number of Kenyans accessing credit services do not understand the costs of the loans they take, putting them at higher risk of defaulting and getting listed by the credit bureau.
HealthtechTechnology and innovation are key in improving Kenya’s health sector, which suffers from a lack of proper structures for response, information, access, and prevention. Quality, distribution, and data provision are therefore ripe for disruption. Health innovations coming out of Kenya are ensuring genuine health products and services are available across different parts of the country and that decisions on personnel and medical equipment distribution, public health priorities, are driven by concrete publicly accessible data.

Featured Tech Startups

Editor’s choice of the country’s top 10 emerging tech startups.

Startup Showcase

Editor’s pick of which ‘Featured Startup’ is especially worth following and why.

AfyaKit is a social venture start-up, focused on improving health outcomes by providing actionable in-facility data to health sector players across Sub Saharan Africa. They have developed an analytics tool that enables easy decision making for health managers. Kenya’s healthcare system is plagued by under equipped medical facilities. Afyakit offers an easy way to track demand and supply of medical equipment. It offers easy to read dashboards that medical facilities can use to justify the need for additional support from local governments.The team comprises Dr. Njogu-Ndongwe who is the head of strategy, Dr. Moses Owino is the Head of Partnerships, Roseline K. Njogu leads Operations and Kennedy Mukuna is the Product Leader.As we quickly move into making data driven decisions, it's important that critical data be publicly and easily accessible. Afyakit ensures that all information necessary for proper running of medical facilities is available and that equipment in those facilities can be accounted for. This introduces transparency in the health sector and also provides information that is extremely useful for local governments, particularly budget holders and policy making officers. Lack of information will now cease to be an excuse and public officials as well as hospital administrators will be held accountable for quality of services.

Talent

Editor’s perspective of the maturity level of talent in the ecosystem.

  • Technical TalentAdvanced
  • Marketing TalentModerate
  • Experienced TalentAdvanced
  • International TalentModerate

Culture and History

Editor’s commentary on how the country’s culture and history have impacted the ecosystem.

The Kenyan startup ecosystem is rapidly growing and vibrant. There have been key catalysts that have led to rapid growth of the ecosystem including: launching of ISPs in the early 90’s; registration of organizations representing the best interests of entrepreneurs and technology providers; establishment of a Kenya internet exchange point in 2000; the launch of M-Pesa in 2007, which opened exciting opportunities around payment; construction of undersea cables in 2009 which ultimately made the internet more affordable; sprouting of hubs across the country ever since (48 according to a recent GSMA report), which ensure that innovators at the grassroots level get access to similar resources as those in the major cities.

Although the ecosystem has grown from strength to strength there is a marked reduction in deal flow during election years. Business in Kenya comes to a near halt because of the constant fear of a recurrence of post election violence as experienced in 2007-2008.

Over the last few years there has been a growing bias towards locally designed and manufactured goods. Kenyans are looking for home grown solutions and products. We have seen this in the hair and skin care industries and also in the payments and edtech spaces. Kenyans are also looking to eat healthier and this has caused the agricultural and logistics spaces to ramp up quality and quantity of produce with a growing number of Kenyans now demanding organic products.

Interested in becoming more involved in this ecosystem and connecting with local ecosystem leaders? Let us know.

Country Snapshot

Economy

Startup funding
Startup funding
US$429 million (2019)
Standard of living
Standard of living
Global rank: 183
Innovation
Innovation
Global rank: 77
Entrepreneurship
Entrepreneurship
Global rank: 109
Annual GDP growth
Annual GDP growth
6.3% (Global avg. 3.0%)
Ease of doing business
Ease of doing business
Global rank: 56
Ease of starting a business
Ease of starting a business
Global rank: 129
Research and development
Research and development
0.8% of GDP (Global avg. 2.3%)
Contract enforcement
Contract enforcement
Global rank: 89

Sources

Startup Funding: WeeTracker
STANDARD OF LIVING: International Monetary Fund - GDP per capita (PPP)
INNOVATION: Global Innovation Index
ENTREPRENEURSHIP: Global Entrepreneurship Index
ANNUAL GDP GROWTH: World Bank
EASE OF DOING BUSINESS: World Bank
EASE OF STARTING A BUSINESS: World Bank
RESEARCH AND DEVELOPMENT: World Bank
CONTRACT ENFORCEMENT: World Bank

Society

Population
Population
53.8 million
Government
Government
Presidential Republic
Stability
Stability
Global rank: 98
Internet usage
Internet usage
17.8%
Smartphone usage
Smartphone usage
20.9%
Literacy
Literacy
72%
Population under 15
Population under 15
40%
Median age
Median age
19.7

Sources

POPULATION: Worldometers
GOVERNMENT: The World Factbook
STABILITY: Global Innovation Index
INTERNET USAGE: International Telecommunications Union
SMARTPHONE USAGE: Newzoo
LITERACY: World Atlas
POPULATION UNDER 15: World Bank
MEDIAN AGE: The World Factbook

Community

Active Investors

Accion Venture Lab (U.S.): Accion Venture Lab provides flexible financial and post-investment support to address these needs. It typically invests US$300,000 to $500,000 in seed-stage startups and can continue to support companies as they grow through follow-on capital that drives scale. Accion has invested in 3 Kenyan companies. (Source: Accion Venture Lab)

Acumen Fund Kenya (Nairobi): Acumen is a non-profit venture fund that uses entrepreneurial approaches to solve the problems of global poverty, and has been investing in East Africa since 2001. It invests in companies that provide solar energy, anti-malaria bed nets, agricultural inputs and more. Acumen has invested over US$28 million in East African companies. (Source: Acumen)

Africa Tech Ventures (Nairobi): Africa Tech Ventures invests in the growth of high potential start-ups in Sub-Saharan Africa. It focuses on companies that increase access to essential goods and services for African consumers or provide solutions that help businesses access markets and financial services. It invests between US$100,000 and US$5 million, in exchange for a significant minority equity stake and the ability to participate in multiple financing rounds. (Source: Africa Tech Ventures)

Bamboo Capital Partners (Nairobi): A commercial private equity firm making investments that matter. It finds game-changing businesses then applies a mix of geographical and sector expertise to deliver financial and social returns. Experts in energy, healthcare and financial services globally, Bamboo has offices in Luxembourg, Geneva, Bogota, Nairobi and Singapore. Since Bamboo launched in 2007, It has close to US$400 million under management with a portfolio of companies in over 30 countries. (Source: Bamboo Capital Partners)

DOB Equity (Nairobi): DOB Equity is a leading Dutch family office investing in innovative, scalable and impactful companies in East Africa. (Source: DOB Equity)

Grassroots Business Fund (Nairobi): Includes both a fund and non-profit that combine to deliver a blend of capital and support suitable for long-term investment in businesses that provide opportunities to under-served communities. In Africa, Grassroots Business Fund has committed more than US$11 million, and invested in Kenyan companies like BrazAfric, Soko, and Wamu. (Source: GBF)

GroFin (Nairobi): A private development finance institution specialising in the finance and support of small and growing businesses. Its investments number over 700 and have sustained over 90,900 total jobs across several sectors and industries, namely: healthcare, education, agribusiness, manufacturing, key services (water, waste & energy), food & accommodation, construction, wholesale & retail, and professional services. (Source: GroFin)

Invested Developmenrt (Nairobi): An investment management company that specializes in building bespoke private market impact investment strategies and identifying and executing private placement investments. (Source: Invested Development)

Kitendo Capital (Switzerland): An angel impact investment fund focusing on developing countries in Asia and Africa. Kitendo typically invests US$100,000-500,000 and focuses on companies in the Agriculture, Education, Health, and Finance sectors. (Source: Kitendo Capital)

Safaricom Spark Venture Fund (Nairobi): Telecom company Safaricom launched this US$1 million venture fund in 2014 to invest in late seed to early growth stage startups that use mobile technology as an enabler. The Fund aims to support the successful development and growth of high potential mobile tech startups in Kenya through a combination of investment, business development support and technical assistance leveraging on Safaricom’s unique capabilities, assets and market positioning. The average ticket ranges from KES6 Million to KES22 Million. (Source: Safaricom Spark Venture Fund)

Savannah Fund (Nairobi): The Savannah Fund is a seed capital fund specialising in making investments of between US$25,000 and US$500,000 in early-stage high growth tech startups in sub-Saharan Africa. (Source: Savannah Fund)

TBL Mirror Fund (Nairobi): A private equity fund based in Nairobi that invests in East African small businesses. (Source: TBL Mirror Fund)

TLcom Capital (Nairobi): A venture capital firm based in Nairobi, Lagos and London, investing since 1999 in Telecom, Media and Technology (TMT) companies in Europe, Israel and Sub Saharan Africa (SSA). TLcom manages total commitments in excess of €200 million. (Source: TLcom)

VilCap Investments (Nairobi): VilCap Investments invests in early-stage companies with social and environmental impact. (Source: VilCap Investments)

incubators

@iBizAfrica (Nairobi): @iBizAfrica business incubator carries out the Entrepreneurship and Incubation theme of @iLabAfrica in Strathmore University, Nairobi. It provides mentoring and services to startup companies such as access to finances, legal advice, financial expertise, relevant training and physical resources. (Source: @iBizAfrica)

GrowthAfrica (Nairobi): GrowthAfrica is a leading acceleration and growth partner for African entrepreneurs and companies scaling their business in and across Africa. It provides support across business planning and development, coaching, a network of mentors, and investment readiness. (Source: GrowthAfrica)

MEST Incubator Nairobi (Nairobi): The MEST Incubator offers hands-on support to bring very early stage startups from launch to scale, offering access to funding and a space in its Pan-African incubator network. (Source: MEST)

Startup Africa (Nairobi): Offers training, networking, pitch competitions, and access to capital. (Source: Startup Africa)

The Land Accelerator (Nairobi): The Land Accelerator is an exciting four-month program and curated network for entrepreneurs who restore degraded forests and farmland. It is anchored by an intensive week-long workshop when the cohort meets in person. There is no fee to join, and the program does not take equity. (Source: The Land Accelerator)

TUMI (Nairobi): TUMI Accelerator focuses on startups that offer transformative, practical, well researched and possibly tested solutions to urban mobility challenges in African Cities. The startups are incubated at our C4DLab in Nairobi for a period of 5 months. During this period, they receive coaching and mentorship from both local and international mobility experts. Further, they have a chance to pitch their start up ideas and have an exhibition space during Nairobi Innovation Week and access to potential partners and investors. (Source: TUMI)

accelerators

Pangea Accelerator (Norway): A program focusing on Agriculture, Education, Healthcare & Infrastructure offering up to US$50,000 in funding. (Source: Pangea Accelerator)

Sinapis Group (Nairobi): An accelerator program that provides early-stage entrepreneurs with advanced business training integrated with Kingdom Business principles, intensive mentorship and the opportunity to compete for seed capital. (Source: Sinapis Group)

The Baobab Network (Nairobi): An accelerator program offering US$25,000 in funding, consulting, and venture support over the course of 2 years. (Source: The Baobab Network)

Startups Raising Capital
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Startups Hiring
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Coworking Spaces/Hubs

@iLabAfrica (Nairobi): @iLabAfrica is a Centre of Excellence in ICT Innovation and Development at Strathmore University in Nairobi. (Source: @iLabAfrica)

Axlr8 (Nairobi)

BitHub (Nairobi): BitHub is a commercial Blockchain hub that is focused on driving Financial and Energy access across Africa. (Source: BitHub)

Eldo Hub Innovation Centre (Eldoret): EldoHub is an I.C.T. and entrepreneurship innovation hub located in Uasin Gishu County in the western region of Kenya. (Source: Eldo Hub Innovation Centre)

Gearbox (Nairobi): A hardware and manufacturing focused hub and coworking space. (Source: Gearbox)

iHub (Nairobi): An innovation hub and hacker space in Nairobi offering incubation programs, community support, and research support. (Source: iHub)

Ikigai (Nairobi)

LakeHub (Kisumu): LakeHub is a technology innovation hub in Kisumu--an open space for entrepreneurs, technologists, investors and makers. (Source: LakeHub)

Metta (Nairobi)

Nailab (Nairobi): Nailab is a business incubator that provides tech entrepreneurs with business advice, technical training and support, professional mentoring and coaching, access to markets and strategic partnerships as well as investors. (Source: Ventureburn)

Nairobi Garage (Nairobi): One of the largest co-working spaces in Nairobi.

Sote Hub (Taita Taveta): The Sote Hub idea was born from the Sote ICT project which started in 2010, implementing a holistic approach that combines ICT integration and training with business skills at 12 schools in Taita Taveta, reaching over 6000 students. Sote Hub is the first rural based business incubator in Kenya. (Source: Sote Hub)

Workstyle (Nairobi)

conferences

Nairobi Tech Week (Nairobi): A tech event series held at Strathmore University in Nairobi. (Source: Nairobi Tech Week)

Seedstars Nairobi (Nairobi): An annual pitch competition in Nairobi. (Source: Seedstars)

meetups

AI Kenya (Nairobi)

Metta (Nairobi): Regularly holds panel discussions on topics that are usually of interest to tech entrepreneurs. (Source: Metta)

Government Programs

Kenya Industry and Entrepreneurship Project: The Kenya Industry and Entrepreneurship Project (KIEP) is a US$50 million project implemented by the Ministry of Industry, Trade and Cooperatives (MoITC), with support from the World Bank Group between 2019-2024. KIEP aims to increase innovation and productivity in select private sector firms in Kenya by strengthening the private sector (including startups, SMEs, incubators, accelerators, technology bootcamp providers, etc.) through financial grants and technical assistance. (Source: Kenya Industry and Entrepreneurship Project)

WhiteBox: Whitebox is an initiative of the Government of Kenya through the Ministry of Information, Communications and Technology and the ICT Authority, geared towards catalyzing the successful growth of local ventures to global, world-class status. (Source: WhiteBox)

Youth Enterprise Development Fund: The Youth Enterprise Development Fund (YEDF) is a state corporation under the Ministry of Public Service, Youth & Gender Affairs. The Fund was established in 2007 as one of the strategies to address the challenge of youth unemployment in Kenya. It is one of the flagship projects of Vision 2030, under the social pillar. The Youth Fund is mandated to create employment opportunities for young people through entrepreneurship. This is achieved by providing financial support and business development services to youth owned enterprises. (Source: Youth Fund)

Non-Government Organizations

CIPESA - ICT Policy Centre for Eastern and Southern Africa: While based in Kampala, Uganda, CIPESA has worked across East and Southern Africa. It works with networks, individuals and organisations (private sector, governmental, academic, civil society) across the region, positioning itself as a leading centre for research and analysis of information aimed to enable policy makers in the region to understand ICT policy issues. (Source: CIPESA)

Startup Lions: An impact sourcing digital service provider, and innovative startup incubator founded in 2015 in the north of Kenya (Turkana County) by European Entrepreneurs. (Source: Startup Lions)

The State of Startup Hubs in Kenya

By: Victor OtienoFebruary 17th, 2020
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