Kenya has become Africa’s start-up funding top destination, according to data from Disrupt Africa.
East Africa’s largest economy defied a global funding decline for budding companies to post a 17% increase in new start-up investments, surpassing Nigeria and Egypt as Africa’s foremost destination for start-up financing.
In 2023, 62 Kenyan start-ups raised an estimated $673.78 million from local and international investors.
Data from Disrupt Africa showed that this was a rise from the $574.8 million raised in 2022, even as the rest of the continent saw a decline in funding.
Nigeria and Egypt, which dominated the start-up funding space in Africa over the last decade, in 2023 recorded a drop, which resulted from a global slowdown in investments due to a plethora of macroeconomic challenges across the globe.
According to the report, it revealed that “unlike elsewhere on the continent, Kenya’s total funding is up. Kenya had a remarkable year in 2023, with its total amount of funding actually rising on 2022 levels, albeit the number of start-ups to secure funding was down like most other destinations.”
In Kenya, majority of the funding raised last year went to energy start-ups, with off-grid solar pay-as-you-go firms M-Kopa and Sun King raising $465 million, or 69% of the start-up funding received.
Sixteen of the companies were Fintechs, nine were e-commerce businesses, seven were Agri-tech, and five were in health-tech and logistics technology.
The report also added that “though the number of start-ups to raise funding in 2023 dipped, Kenya, nonetheless bucked pan-African trends with the total amount of funding growing, as well as the level of employment created by the start-up ecosystem.”
Twenty-five, or 36%, of the 69 start-ups raised at least $1 million last year, a decline from 49 in 2022, but still a higher proportion than in other countries in Africa.
In Africa, the number of funded start-ups dropped from 633 in 2022 to 406 in 2023, with the total amount raised dropping by 28% to $2.4 billion in 2023, from $3.3 billion in 2022.
Of the four African countries that have habitually dominated start-up funding on the continent, two saw a drop.
Nigeria’s total investments saw a sharp decline almost three times from $976 million in 2022 to $399.9 million in 2023.
Egypt’s start-up investments also dipped from $811 million to $590 million in that period, while South Africa recorded a surge to $512 million, from $329 million in 2022.
The tracked funding for Africa came from various sources, with venture capital, development financial institutions and angel investors, injecting mostly equity investments (89%), and a few debt investments (11%).
