Kenya is emerging as a regional ICT fortress, attributable to its strategic positioning and
relatively vibrant socio-economic ecosystem. However, as enticing and succulent as the prospects may be; there is an underlying concern that cannot be wished away — that Kenyan tech startups are struggling.

According to the Networked Readiness Report 2018, Kenya has made significant strides over the years in terms of ICT infrastructure and is East Africa’s de facto vanguard, only trailing South Africa and Tunisia as a tech destination. On the importance of ICT to government operations as well as its success in promoting ICT, Kenya was ranked 18th and 21st respectively globally. All the factors mentioned above are sufficient enough to provide a climate whereby tech startups can thrive. As an emerging market, there exists in plentiful social challenges that the tech startups could solve, but challenges still persist that are derailing the Kenyan tech startups from ultimate takeoff.

A significant number of these homegrown entities are facing a myriad of challenges that are hindering them from fully realizing their massive potential. A report by Global Village titled Venture Capital: Breaking the pattern, indicates that only 10% of East African
companies that have received funding are locally owned.

Capital inadequacies

Notably, there is a high level of reluctance from local investors to inject capital into the startups. According to a survey conducted by I-DEV Insights, the local investors seemed only interested in companies that already had at least one foreign investor in them. This
is an undeniable fact backed by Investment data from Disrupt Africa 2015/2016 which indicated that 90% of disclosed investments during the period went to startups with at least one or more European or North American founder. This was with the exclusion of USbased Tala and Branch which raised over US$ 10 million and US$ 9.2 million in 2015, and 2016 respectively.

Social capital limitations

The lack of sufficient social capital has been a major crippling factor for these startups.

To read the rest of this article from B&M Issue 1, please download the FREE pdf or view it as a flipbook here.

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