Kenyan startups raised more than Kes12.83 billion in funding across 24 deals in the quarter ended June, driven by cleantech and fintech innovations that chalked funding and number of deals in dominance against the backdrop of the global decline of venture capital flows.
According to Briter Bridges, a global provider of market insights, except in March, since the beginning of the year, Kenya has always emerged the first in funding among key African markets. During the review quarter, it was closely followed by Benin, which benefited from $50 million in debt funding for two-wheeler manufacturing company Spiro, making it the second-placed country. South Africa took the third position with 22 deals valued at $49 million.
Notable during the period was M-Kopa’s commitment of a $51 million (Kes6.54 billion) loan from the U.S. International Development Finance Corporation (DFC). It is meant for improving digital connectivity by giving people affordable smartphones in underserved communities in Kenya. DFC Chief Executive Scott Nathan said he feels elated that the loan would fund M-Kopa’s digital initiatives.
M-Kopa, a clean energy solution provider, has diversified into the realm of financial services for unbanked millions across Africa. According to Briter Bridges, in general, the cleantech and mobility startups had a bias toward debt financing. This could be explained by the fact that those companies are associated with stable revenue streams and asset-backed models, which give security to the lenders.
While most of the deals across Africa were less than $1 million, Edtechs have attracted some investor eyeballs. Potential in use of Edtechs in driving access to quality education has garnered support from investors and accelerator programs such as the Mastercard Foundation Edtech Fellowship.
Despite the achievements, the total funding for startups in the three months to June 2024 fell back to pre-Covid levels, comparable to 2018 financing. Notably, no startups raised $100 million+ mega-rounds in Q2 2024 compared to four such transactions in Q2 2023.
For example, the funding of startups in Africa dropped considerably during the first half of 2024, closing with $780 million, as per Africa: The Big Deal, which is a staggering drop of 57 percent when compared with the exact period during the previous year. Transportation and Logistics took the biggest stake of funding at 28 percent, with Moove and Spiro making a big statement in the space. On the other hand, regarding the number of startups that raised $1 million or more, Fintech remained king.
However, the funding split was disproportionate for female-founded and –led startups, as 85% had no female founders whereas only 92% had companies with a male CEO.