Funding for Kenyan startups by international investors declined by $138 million last year amid a fall in the number of deals valued at more than $1 million.
Data from American online platform Substack shows that funding for young Kenyan firms fell to $411 million last year from $549 million in 2020, a 25.1 percent drop.
This came as the country’s ranking on deals valued over $1 million raised in Africa fell from position one in 2020 to fourth last year.
“Kenya had a particularly strong 2020, topping the table but failed to continue at the same levels in 2021. Last year tells a more contrasted story as the country dropped to fourth in terms of the number of $1 million deals and fifth in total amount raised,” the Substack report says.
Last year’s plunge came after Kenyan startups recorded a funding growth record of $549 million in 2020, up from $184 million in 2019.
Nigeria led venture capital investments in Africa with $1.5 billion last year. South Africa followed at $945 million and Egypt at $599 million.
“Nigeria showed a slump in 2020 but rebounded massively in 2021, driven by a few strong mega deals,” the report noted.
Kenya is home to several startups, such as Twiga Foods and Komaza, attracting billions of shillings annually from international investors. The most active investors in the continent are Launch Africa with more than 44 deals, Kepple Africa (32), Y Combinator (27), LoftyInc Capital (23) and Flat6Labs (19).
Like in the developed world, most of the startups being funded in Kenya and other African markets are in the technology sector.
The growth of Internet connectivity has enabled innovators to come up with new solutions for problems in various areas such as payments, marketing, entertainment and transportation. Investors are attracted by the potential of the solutions to be developed at scale and with minimal incremental costs through mobile apps or computer software.