Between 2015 and 2020, for example, investments in the country increased to US$241 millionSh26 billion from US$193 million, representing a 27.3 percent of the continent’s total investment.
“This is the largest amount of funding ever achieved by a single country. The record was previously also held by Kenya, when in 2019 the country’s start-ups netted US$150.4 million,” Disrupt Africa Tech Start-ups 2020 Funding report indicates.
The growth was driven by an increase in the number of start-ups that raised funding, which rose to 59 from 45, representing a 31.1 percent jump.
Others were logistics start-up Sendy at US$20 million, retail-tech solution Sokowatch raised US$14 million, energy ventures SunCulture US$14 million), Angaza US$13.5 million, and Solarise US$1 million.
“This is only the fourth highest tally in terms of number of funded companies – with Nigeria, Egypt and South Africa all boasting more funded start-ups, albeit to a (substantially) lesser cash total,” the report notes.
The duo stewardship has seen the company secure funding from international organisations, among other investors.
The start-up runs a mobile phone-based platform that sells bananas and other fresh produce from small-scale farmers to local vendors and markets.
Similarly, in 2020, Logistics firm Sendy, which operates an app linking delivery drivers with customers, raised US$18.6 million in funding from a group of institutional investors including Japanese conglomerate Toyota Tsusho Corporation (TTC) for expansion.
Whereas only six funded ventures bagged over US$1 million -plus rounds in 2015, this increased to 22 in 2021 in the country.
“The number of start-ups raising over a million dollars has been on the rise for years in Kenya; and the size of these rounds is also fanning out – whereas in the early years even the highest rounds were in the US$1-2 million range, today large tickets span from US$1 million US$30 million, evidencing the increasing availability of growth funding.”
Top five rounds of 2020
Standout rounds 2020 went to Egyptian e-health venture Vezeeta with US$40 million, Nigerian fintech Flutterwave US$35 million, South African retail start-up Skynamo US$30 million, Kenya agri-tech company Twiga Foods US$29.4 million and Kenyan conservation solution Komaza US$28 million.
Countries with highest tech start-ups funding
Least being marketing (1.5 percent), prop-tech (2.5 percent), artificial intelligence (AI) and internet of things (IoT) (2.5 per cent).
“Looking at funding figures for 2019, it seemed like fintech – long Africa’s most attractive destination for tech start-up funding – might be losing some of its allure. Though the number of funded ventures continued to rise, total investment had declined by almost 20 per cent from 2018,” the report adds.
Despite the growth, budding entrepreneurs find it difficult to secure seed as well as other forms of early-stage funding in the country.
This is because major rounds raised in the country go to companies with expat founders or CEOs. For example, out of the six stand-out deals, all went to companies with expat founders.
“The country certainly lacks the thriving local angel community apparent in Nigeria, for example. So, while Kenya has the innovation and on-the-ground activity to keep producing success stories year by year, more needs to be done to promote local investment into local companies at all stages of the start-up life cycle.”
“Corporate budgets are in flux, development institutions may prioritise aid over investment, and signing up LPs to your latest African fund given the risks that are inherent with relatively early-stage investments in emerging market businesses, may yet prove much more challenging in 2021. It is this that could yet have a negative impact on investment, and start-ups must await nervously developments for 2021,” it adds.