A story on the state of the startup scene in Kenya has got many riled up on the seemingly uneven playing ground, stacked against local founders and companies. The story "Silicon Valley has deep pockets for African startups – if you’re not African" appearing in The Guardian , detailed how many African owned startups are starved of funding and only white backed startups attract meaningful funds.
The article quoted the Venture Capital in Africa by African Private Equity and Venture Capital Association which painted the paltry investments made by local investors.
"Foreign investors have been attracted by new opportunities and new markets in Africa. North American investors represented 42% of the total number of investors that participated in VC investments on the continent between 2014 and 2019, followed by European based investors at 23%. African based investors accounted for 20%, followed by Asia-Pacific (8%) and investors based in the Middle East (6%)," the report stated.
A 2019 report by Timon Capital and Briter Bridges also showed that there were more expat founders in Kenya than locals cementing the foreign founder trend in the country. "In Kenya, 37% of the co-founders surveyed were expats compared to 10% in Ghana and 5% in Nigeria," the report said.
Kenya has set its name as the hub of innovation right after the success of mobile money in the country. It has become the petri dish for new models of transaction, fintech and mobile technology in Africa. Kenya’s high mobile (SIM) penetration of 116.1 per cent and internet penetration currently over 80 per cent have made it a conducive country for tech innovation.
This reputation has attracted entrepreneurs from established markets such as Silicon Valley. In return, the most funded companies in Kenya are generally white-owned companies, resulting in the term "white capital".
Even though this has given a chance for foreign dollar inflows and creating jobs, the Kenyan startup scene seems to have been owned by foreigners, while local innovators scramble for the little they can to keep their business afloat.
According to Partech funding report for 2019 , Kenya ranked second after Nigeria in Africa after attracting investments of US$ 554 million. Nigeria ranked first with over US$ 700 million in investments.
Whichever side you are on in the argument on the tilted startup space in Kenya, one thing that Kenya cannot run away from is the internal funding gaps that have never been addressed not only in the tech […]
