Kenyan startups raised Sh60.7 billion in funding in 2022 - almost double the amount recorded the previous year.
This is according to a report on the state of startups in the country by Disrupt Africa, which provides information about startups and technology in the continent.
As of mid-November 2022, some 63 startups had raised funding with the country’s total for the year standing at Sh60.7 billion ($506.6 million).
“This is approaching double the Sh34.9 billion ($291.98 million) raised by Kenyan startups in 2021 and represents a record annual total for the ecosystem,” says the report titled The Kenyan Startup Ecosystem Report 2022.
The report lists Kenya as one of the four leading startup ecosystems on the continent when it comes to funding. These four top startup markets in the continent are Kenya, Egypt, South Africa and Nigeria.
Between January 2015 and mid-November 2022, 242 individual Kenyan startups secured sizeable investments.
“Those startups secured a combined Sh153.7 billion ($1.3 million) between them, a figure bettered in that time only by Nigeria,” reads the report released in December 2022.
According to the report, of the four countries, Nigeria attracted the most funding for startups between January 2015 and mid-November 2022 leading with Sh248.2 billion ($2.07 million) which is followed by Kenya with Sh153.7 billion ($1.3 million).
The figure for Nigeria is as of October 2022.
South Africa has attracted funding worth Sh119.1 billion ($993.7 million) as of June 2022 and Egypt Sh94.9 billion ($791.07 million) as of October 2021
The report also dissects into the sectors which they ventured in and analysing the performance.
These sectors are fintech, agri-tech, e-commerce, logistics, e-health, ed-tech, recruitment, energy, marketing, and mobility.
It also delves into issues such as job creation, and accelerator programmes, where these businesses are normally incubated as just an idea before they are launched into the market. This is in comparison to the main competitors: South Africa, Egypt and Nigeria.
A total of 308 startup businesses participated in this publication.
The report cites that Kenyan startups have access to unparalleled levels of ecosystem support, with almost half the 308 companies tracked by this report having undergone some form of acceleration or incubation over the course of their lifespan.
“In all, 140 companies have taken part in either a local or an international accelerator or incubator programme, with this 45.5 per cent figure better than the 45.1 per cent seen in Nigeria, the 38.6 per cent witnessed in Egypt, and the 25.7 per cent rate tracked in South Africa,” the report reads.
When it comes to job creation, the report documents that the 308 Kenyan tech startups tracked by this report employ a combined total of 11,462 people, far fewer than the 19,334 employed by their counterparts in Nigeria but marginally more than the 11,330 jobs provided by South African tech startups.
“The average headcount per startup stands at 37,” it reads.
The fintech sector accounts for 27 per cent of Kenyan startup employment, the report says, with 3,100 jobs, while between them the fintech, agri-tech, and e-commerce and retail-tech sectors, account for over 50 per cent of jobs.
The report lists fintech as the leading subsector in the Kenyan startup space. There are 93 startups (30.2 per cent) invested in this space and the report states the number is almost three times more than its nearest challengers.
“Those are agri-tech and e-health, which account for 10.1 per cent of Kenyan startups each, with e-commerce and retail-tech, recruitment and HR, and ed-tech coming in third, fourth and fifth respectively,” the report states.
“Kenya has an extremely varied range of activity across its startup ecosystem, with ventures active across areas as varied as mobility, logistics, agri-tech, marketing, prop-tech, legal-tech, waste management, and energy.”
In fintech, the report lists payment and remittances, lending and financing as the most popular areas of investment for these businesses.
There were 24 ventures which represent 25.8 per cent of fintech companies. “This is no surprise, as these areas cover many of the most fundamental financial services that are still lacking for much of the population; and historically these categories have been the jumping off point for fintech ecosystems continent-wide,” the report says.
Other areas in this space are business administration, insurance, personal finance, investment, security, blockchain, identity verification and open finance.
“It is no surprise that 92 of the 93 startups in the fintech space are based in Kenya’s capital, Nairobi,” the report notes. “There is the suggestion that the fintech space in Kenya is entering a slightly more mature phase, as new launches have definitely slowed.”
When it comes to gender balance, the report found out that only 55 (17.9 per cent) of Kenyan tech startups have at least one woman within their founding team, meaning the country is more diverse in this regard than all of its fellow “big four” ecosystems - Egypt, Nigeria, and South Africa.
“However, this figure is still far too low for a leading ecosystem such as this,” the report says.
The document notes that the newer generation of startups is more likely to be female-founded, and a handful of venture capital firms are especially focused on backing female entrepreneurs, with over 80 per cent of ventures solely male-founded.
It adds that there is clearly work to be done to ensure more women become leaders within the country’s startup landscape.