The Great Debate: Why Kenya may be the Best Country to Launch and Scale Your Tech Startup!

This post was created by Vickie Remoe, Emerging Markets PR & Communications Expert for the MEST Africa Challenge.

The Great Debate

How do African countries rank when it comes to creating the enabling environment for technology startups to thrive? Do tech entrepreneurs fare better on the West, East, or South of the continent? And, if a founder is looking to launch a tech venture in which African country can one find a startup ecosystem with the right balance to jump-start startup success? This is the Great Debate!

The Kenyan edition of the Great Debate is part of a larger series of articles that explores startup ecosystems in the nine 2020 MEST Africa Challenge markets, also including South Africa, Senegal, Rwanda, Tanzania, Ethiopia, Nigeria, Ghana, and Cote D’Ivoire. These African countries have some of the most developed tech startup ecosystems on the continent. Where some markets have the right culture, and mature capital markets, others can leverage stronger networks and ICT Infrastructure. Check out the entire series and decide which African country you think is the best market for tech startups!

Why Startup in Kenya

When telecommunications giant Safaricom launched MPesa in Kenya in 2007, it was the start of a national tech revolution. MPesa created financial inclusion for millions of unbanked in the informal sector and its mobile payment system made it easier for B2B and B2C transactions-an unprecedented opportunity for entrepreneurs. In 2019, Vodafone reported that MPesa had an active customer base of 37 million who 11 billion transactions that year.

Over a decade of MPesa success has created a favorable ecosystem and culture of innovation supports tech startups to launch and scale. Also noteworthy is Kenya’s robust tech startup network spearheaded by iHub’s launch a decade ago, as well as numerous other incubators and accelerators like mLab and iLab that provide startups with co-working spaces, training, mentorship, and access to investors.

With 95% of Kenyans in urban areas with Internet access and high digital literacy, startups not only benefit from the market potential and they also have the expansive ICT infrastructure needed to scale.

“Kenya’s talent is so great, and in a small amount of time, new advancements and policies have driven digitization and provided the opportunity for education and growth in this country, ” said Claire Munene, Chief Commercial Officer of mSurvey.

In addition to its ICT Infrastructure, conducive startup culture, and a robust network, Kenya’s Savannah Valley is being funded by an increase in foreign direct investment to East Africa. Here startups have access to capital ranging from pre-seed, grants, early-stage to Series rounds.

Ecosystem Players

Kenya’s Startup Ecosystem has a variety of stakeholders that offer non-financial business support, mentoring, co-working spaces, as well as startup accelerators. Key ecosystem players in this market include Nairobi Garage, NaiLab, SwahiliBox, EAVCA, and iHub.

Nairobi Garage is a hub for SMEs, startups, and entrepreneurs. Members get access to business opportunities, networking events, workshops, marketing support — as well as professional business services.

NaiLab’s accelerator program has supported over 400 startups with coaching and business skills training. They also connect startups with investors. They have three separate offerings for startups; they are the local partner for the $1 million African Netprenuer Prize funded by the Jack Ma Foundation, The Next Economy — a two-part training program for 19–30-year-old Entrepreneurs and Leap2 an online platform to bridge the digital divide.

SwahiliBox supports tech enthusiasts, developers, and designers with training, mentorship, and community meet-ups that promote innovation.

The East Africa Venture Capital Association (EAVCA) promotes East Africa as a private capital destination and advocates for the private equity industry. They provide training, market insights, and organize events to connect key stakeholders.

Founded over a decade ago iHub supports tech entrepreneurs and innovators with three products; network of mentors, investors and business coaches, incubation and acceleration programs for startups, and tech research and knowledge creation.

Investors

For financial services — smart money for startup growth in Kenya, entrepreneurs have access to grants, angel investors, pre-seed, debt, and equity investment. The majority of investors here offer startups the capital they need to launch. Some investors in this market include Y Combinator, Mastercard Foundation, Kuria Capital, GreenTec Capital Partners, and Viktoria Business Angel Investors Network.

Y Combinator invests $150k in return for 7% of each startup’s equity. Operating across the world they offer Seed capital to Kenyan Startups as well as a 3-month accelerator program to get ventures investment-ready.

The Mastercard Foundation’s Centre for Innovative Teaching and Learning in ICT offers $40,000 grants to Edtech startups working on innovations in secondary education.

Kuria Capital’s venture Innovation Fund offers seed funding, grant, and international equity investment to young entrepreneurs and inventors.

GreenTech Capital Partners makes equity invests in African start-ups focused on agriculture, digitalization, and sustainable resources. Investment size and structure varies as per the needs of each venture.

Viktoria Business Angels Network (VBAN) connects post-prototype and post-first revenue startups in entertainment, transport, and infrastructure with angel investors. Startups most provide sales traction, and at least one founder must be full-time staff at the time of investment.

Kenya Startup Spotlight

A shining example of how startups are thriving in Kenya is Waya Waya. Founded by Kenya’s Teddy Ogallo, Waya Waya is a mobile platform that connects banks, mobile wallets, and payment providers, enabling users to have one account that allows them to save, invest, make transfers and payments, and access value-added services across the world. Last year, Waya Waya pitched at the 2019 MEST Africa Challenge: Nairobi edition and went on to be named one of three winners of the final pitch.

MEST Africa Challenge Country Finals: Kenya

Join MEST and Microsoft on June 10th, 2020, for the online Kenya Country Finals of the MEST Africa Challenge. Startup finalists will pitch their business ventures virtually to a panel of expert judges made up of leaders, investors, and ecosystem partners. The best from the Kenya finals will go on to compete against winners from eight other countries including Nigeria, Senegal, South Africa, Ghana, Côte D’Ivoire, Ethiopia, Tanzania, and Rwanda for $50,000 in equity investment and a chance to join MEST’s Africa-wide startup support network. Register to join, here.