Kenya Startup Funding Trends 2025

Kenya’s startup ecosystem is thriving, with $638 million raised in 2024, making up 29% of Africa’s total $2.2 billion funding. While other top markets like Nigeria, Egypt, and South Africa saw declines, Kenya grew by 3%. Here’s what stands out:

Sector Shift: Kenya moved from fintech dominance to climate-tech and agri-tech, with cleantech alone accounting for 46% of total funding.
Major Deals: Notable investments include d.light ($176M), BasiGo ($42M), and M-Kopa ($51M).
Regional Leadership: Kenya claimed 88% of East Africa’s $725M total funding.
Funding Challenges: Early-stage funding struggles, with only 5% of seed startups reaching Series A.

Kenya’s renewable energy grid (90% clean energy) and supportive policies like the Digital Superhighway project are driving growth. However, global economic pressures and regulatory hurdles remain challenges for startups. In 2025, expect further growth in AI and climate-tech sectors, backed by government initiatives and investor confidence.

2024 Funding Overview and Key Numbers

Total Funding and Breakdown

Kenya’s startup scene made impressive strides in 2024, securing $638 million in funding. This achievement stands out, especially as overall African startup funding dropped by 25% – from $2.9 billion in 2023 to $2.2 billion in 2024.

In just the first half of 2024, Kenyan startups raised $244 million, accounting for 32% of Africa’s total funding during that period. An additional $201 million came in during the third quarter, solidifying Kenya’s position with 29% of the continent’s total startup funding.

Main Factors Behind Funding Growth

Kenya’s funding momentum reflects a mix of strategic government policies and infrastructure development that have drawn investor attention. Key initiatives like the Digital Superhighway project and the proposed Startup Act have created a fertile environment for startups to thrive. Additionally, the country’s renewable energy grid – powered 90% by geothermal, hydro, wind, and solar sources – has become a distinct advantage.

The removal of transport fuel subsidies has also opened doors for electric vehicle startups. Jit Bhattarcharya, CEO and Co-founder of BasiGo, highlighted the unique opportunity this presents:

"Electric vehicles are now able to go head-to-head with traditional combustion engine vehicles because these vehicles are powered by Kenya’s renewable energy grid. The impact is much greater than anywhere else in the world."

Major Deals and Investments

Several high-profile funding rounds in 2024 underscored investor confidence in Kenya’s climate-tech and fintech sectors. Notable deals include:

d.light secured $176 million through a securitization facility in July 2024. This solar-powered solutions provider received backing from African Frontier Capital to scale operations across Kenya, Tanzania, and Uganda.
BasiGo raised $42 million to roll out 1,000 electric buses across East Africa over the next three years. This funding included $24 million in Series A equity and $17.5 million in debt facilities, with Africa50 leading the round alongside British International Investment and the U.S. International Development Finance Corporation.
M-Kopa obtained a $51 million loan from the U.S. International Development Finance Corporation in May 2024, aimed at improving digital connectivity for underserved communities.
SunCulture raised $12 million in April 2024 to develop energy and water solutions powered by Kenya’s renewable resources.

These deals highlight the critical role of Development Finance Institutions in supporting green energy and infrastructure-focused ventures. The growing reliance on debt funding, particularly in asset-heavy sectors like renewable energy and electric vehicles, marks a shift in Kenya’s investment landscape. These trends set the stage for further growth and innovation in 2025.

Kenya leads Africa in Startup Funding in 2024, What does this mean?

Funding Trends by Sector

Digging deeper into Kenya’s funding landscape reveals a clear shift in focus from fintech to climate and agricultural technologies. Unlike other African markets where fintech continues to dominate, Kenya’s startup ecosystem in 2024 has leaned heavily into cleantech and agri-tech, carving out a distinct identity.

Agri-Tech’s Leading Position

Agri-tech has become a cornerstone of Kenya’s funding achievements, securing 15% of the country’s venture capital investments. This sector thrives by addressing the practical needs of Kenya’s significant agricultural workforce. As Andreata Muforo, a partner at TLCom Capital, highlighted:

"These climate-tech startups are supported by an enabling business environment built on a 90% renewable electricity grid from sources like geothermal, hydro, wind, and solar power."

While agri-tech funding across Africa dropped 38% to $88.6 million in 2024, Kenya managed to defy this trend, maintaining robust investment levels. This resilience underscores the country’s competitive edge in the sector, driven by its unique resources and infrastructure.

Growth in Mobility and Energy

Beyond agriculture, Kenya is also making strides in mobility and energy, sectors that are increasingly focused on sustainability. Mobility funding across Africa rose by 60% in 2024, with Kenya claiming a significant share of this growth, particularly in electric vehicle (EV) and clean energy projects.

Take BasiGo, for example. The company raised $38 million to roll out 1,000 electric buses across East Africa. This success showcases how Kenya’s renewable energy infrastructure gives mobility startups a distinct advantage. Similarly, while cleantech investment across Africa dipped 35% to $192 million, Kenya stood out by attracting 67% of the continent’s climate-focused venture capital funding. Cleantech alone accounted for 46% of Kenya’s total funding, reflecting the combined impact of supportive policies and a well-developed clean energy grid.

Fintech’s Funding Decline

Kenya’s fintech sector, once a dominant force, saw a sharp decline in equity funding in 2024, attracting just 13% compared to over 40% in previous years. While fintech across Africa secured $1.4 billion – 60% of total equity funding – Kenyan fintech startups received only $63 million.

To adapt, many Kenyan fintech companies turned to debt financing, which accounted for 34% of the country’s $382 million in total debt funding. However, challenges remain. Only 5% of seed-funded Kenyan fintech startups successfully progressed to Series A funding, a rate 85% lower than the global average.

Sector Performance in Kenya vs. Africa	Kenya Share	Africa Average
Cleantech	46%	9%
Agri-tech	15%	4%
Fintech	13%	60%

This breakdown highlights Kenya’s unique position among Africa’s top startup hubs. Unlike its peers, which are largely driven by fintech, Kenya’s success is rooted in climate and agricultural technologies. These sectors align naturally with the country’s renewable energy resources and policy priorities, setting it apart as a leader in sustainable innovation.

Funding Stages and Regional Position

Kenya’s investment landscape in 2024 reveals a strong preference for later-stage startups over early-stage ventures, mirroring trends across the continent. This shift highlights Kenya’s position as a key player in Africa’s startup ecosystem and provides insight into how funding stages align with the country’s market strengths.

Growth-Stage Deals Dominate

Growth-stage investments have seen a major uptick across the region. Funding for these deals jumped from $573 million in 2023 to $840 million in 2024 – a 47% year-over-year increase. Kenya reflects this trend with larger deal sizes and solid revenue performance. The average growth-stage investment climbed by 15% to $39.8 million, and these deals now represent 38% of total funding, up from 25% in 2023. Even in a challenging economic climate, investors are focusing on companies with proven revenue.

Seed-Stage Funding Takes a Hit

Seed-stage funding, on the other hand, has declined. Across Africa, seed investments dropped from $518 million in 2023 to $482 million in 2024, a 7% dip. The number of deals also fell, from 337 to 315. Although seed-stage companies still account for 69% of total deal volume, they only represent 22% of total equity funding. Interestingly, the average seed investment size grew by 26%, reaching $1.6 million, as investors concentrated on fewer but larger early-stage rounds. However, the conversion rate from seed to Series A plummeted – from 35% for the 2019 cohort to just 5% for the 2023 cohort.

Funding Stage Performance in Africa	2023 Amount	2024 Amount	Change
Seed	$518M	$482M	-7%
Series A	$547M	$503M	-8%
Series B	$642M	$413M	-36%
Growth	$573M	$840M	+47%

This disparity across funding stages highlights Kenya’s strategic advantage compared to other African markets.

Kenya vs. Other African Markets

Kenya’s overall market performance in 2024 underscores its leadership in the African startup scene. The country secured $638 million in funding, accounting for over 33% of Eastern Africa’s $725 million total. This resilience is particularly notable given the global economic challenges.

Meanwhile, Nigeria – often seen as Africa’s largest startup hub – saw an 11% rise in equity funding, reaching $520 million. However, this figure fell short of Kenya’s total. West Africa as a whole raised $587 million, trailing Eastern Africa’s $725 million. Kenya contributed a staggering 88% of Eastern Africa’s total funding, solidifying its role as the region’s startup hub.

Kenya’s funding landscape also stands out for its sector diversity. While other markets remain heavily reliant on fintech, Kenya’s portfolio spans multiple industries. Debt financing is another key component, with Kenya contributing to Africa’s $1 billion in total debt capital – a figure that, despite a 17% decline from 2023, highlights debt’s growing importance for revenue-generating startups. Other regions experienced sharper funding declines, with North Africa and Southern Africa seeing drops of 35% and 36%, respectively.

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Challenges and Risks in Startup Funding

Kenya’s strong funding performance in 2024 highlights its potential, but the startup landscape is not without its hurdles. Entrepreneurs and investors alike must navigate a tricky mix of global economic challenges and local regulatory uncertainties that could shape the future of the ecosystem.

Economic and Global Market Pressures

The broader global economy has cast a shadow over African startups, including those in Kenya, despite its standout performance. Venture capital deals across Africa plummeted by about 52% between 2022 and 2024, marking the steepest decline of any region worldwide. This drop reflects a cautious investment climate fueled by economic instability.

Rising interest rates and currency fluctuations have forced investors to rethink their strategies. As Lexi Novitske, Managing Partner of Norrsken 22, puts it:

"Economic headwinds are real. Currency issues are real. We very much have to watch how our dollar-based investments are going to perform over time when spending power in dollars is eroding year on year. That has been a big issue in Nigeria".

Investors are now focusing their attention on the most developed startup hubs – Egypt, South Africa, Kenya, and Nigeria – concentrating limited resources in these markets. While this benefits Kenya in some ways, it also intensifies competition for funding.

Kenya’s reliance on foreign capital adds another layer of vulnerability. Around 80% of funding for African startups comes from international investors. When global markets tighten, local startups often struggle to find alternative funding due to a lack of robust domestic investment channels.

Adding to the complexity, investor priorities have shifted. The earlier emphasis on rapid growth has given way to a focus on profitability and operational efficiency. This shift poses challenges for early-stage startups that need time to refine their business models before turning a profit.

Key Economic Challenges	Impact on Kenyan Startups
Currency volatility	Reduces returns for dollar-based investors
Rising interest rates	Makes debt financing more expensive
Global investor caution	Shrinks the pool of available capital
Profitability focus	Pressures startups to generate revenue sooner

These economic pressures are only part of the story. Local regulatory hurdles add another layer of complexity for startups and investors.

Regulatory and Policy Issues

Kenya’s regulatory environment presents its own set of challenges, further complicating the startup funding ecosystem. Frequent policy changes and inconsistent tax regulations create uncertainty, making it hard for businesses to plan for the long term.

Government agencies in Kenya often hold significant discretionary power, leading to unpredictability for investors. This issue is compounded by Kenya’s ranking of 126 out of 180 countries on Transparency International’s 2023 Global Corruption Perception Index, which raises concerns about governance and fairness.

Administrative inefficiencies, such as delays in processing work permits, make it difficult for startups to attract international talent. Additionally, overlapping and sometimes contradictory regulations create bureaucratic obstacles that slow down operations and deter foreign investment.

High-profile enforcement actions also impact investor sentiment. For instance, in December 2023, the Competition Authority of Kenya (CAK) fined a local franchise of a foreign supermarket chain $7.7 million for alleged buyer-power abuse. Cases like this add to the perception of risk for potential investors.

The regulatory landscape is particularly challenging for fintech startups, which must navigate a maze of financial rules. A 2018 report revealed that 24% of fintech startups identified an unfavorable regulatory environment as a significant barrier. These challenges often force startups to adapt their business models to comply with local policies, potentially limiting their ability to scale internationally and reducing their appeal to global investors.

As Ahunna Eziakonwa, UNDP Africa Bureau Director, aptly summarizes:

"Investment remains scarce, regulations are inconsistent, and markets are frustratingly fragmented".

Kenya’s startups are caught between navigating local regulatory complexities and competing on a global stage, a balancing act that could test the country’s position as a regional leader in funding.

2025 Outlook: Trends and Opportunities

Kenya’s strong 2024 funding performance has laid the groundwork for exciting developments in 2025, particularly in the fields of AI and climate technology. As Africa’s leading destination for funding, Kenya benefits from a combination of proactive government policies and emerging market trends that are driving growth in these critical sectors.

AI and Digital Infrastructure Development

Kenya is positioning itself as a leader in artificial intelligence across Africa, supported by a national AI strategy designed to strengthen its startup ecosystem. The government has committed KES 152 billion (around $1 billion) to this strategy through 2030, with a significant portion allocated to developing essential digital infrastructure. This includes creating a national "AI cloud", expanding the National Optic Fiber Backbone (NOFBI), and introducing edge computing capabilities.

In addition to infrastructure, Kenya plans to train thousands of tech professionals and prioritize the procurement of locally developed AI solutions. This approach ensures a thriving domestic market for startups. John Tanui, principal secretary for ICT and Digital Economy, highlights the ambition behind this initiative:

"The AI Strategy is designed to position Kenya not just as a participant, but as a pacesetter in the global AI landscape, with a particular focus on Africa".

The centerpiece of this effort is Konza Technopolis, which will host the AI cloud, a supercomputing facility, and an AI innovation park. These plans align with Kenya’s broader Digital Economy Master Plan 2022–2032 and leverage partnerships with global tech giants like Microsoft and G42 from the UAE. Key opportunities for entrepreneurs lie in developing AI tools for agriculture, such as crop disease diagnostics, and AI-powered educational tools for schools. While AI gains momentum, Kenya’s climate-tech sector is also attracting significant attention and investment.

Climate-Tech Investment Growth

Climate technology has become the fastest-growing investment sector in Africa, with Kenya at the forefront of this shift. By September 2024, climate tech had overtaken fintech as the continent’s top-funded sector. African climate tech startups raised $413.9 million by that time, accounting for one-third of all startup funding on the continent. Since 2019, the sector has attracted over $3.4 billion in funding, including $1.1 billion in 2023 alone.

Kenya’s renewable energy leadership further enhances its appeal to climate-tech investors. Over 92% of the country’s electricity comes from renewable sources, and it aims to achieve 100% renewable energy by 2030. This abundant supply of clean energy creates opportunities for startups, particularly in the electric mobility space. President Ruto has underscored the economic potential of green initiatives, stating:

"See in green growth not just a climate imperative, but a fountain of multibillion-dollar economic opportunities".

Investment is also expanding beyond traditional areas like solar and wind energy. Startups in sectors such as logistics, transport, agriculture, water, energy, and climate fintech are now attracting attention. Success stories from recent years highlight this trend. In 2023, Roam (formerly Opibus) raised $7.5 million to scale production of electric motorcycles and buses tailored for Africa’s rugged conditions. Similarly, Apollo Agriculture secured $40 million in 2023 and an additional $10 million in 2024 to advance climate-resilient farming solutions.

The broader region is also seeing progress, such as Ghana’s PEG Africa being acquired by UK-based Bboxx in a $200 million deal. Supportive policies like Kenya’s e-mobility initiatives and the Startup Act 2022 are helping create a favorable environment for climate-tech startups. Events such as the Africa Climate Tech & Investment Summit in Nairobi are further connecting local innovators with global investors. For startups entering this space, demonstrating both environmental benefits and strong financial returns will be critical to securing investment.

Key Takeaways and Next Steps

Kenya’s startup ecosystem, which achieved an impressive $638 million milestone in 2024, now faces a mix of opportunities and challenges. To move forward, stakeholders must adopt thoughtful strategies that address existing barriers while tapping into emerging possibilities.

Entrepreneurs should prioritize building businesses with strong unit economics instead of chasing unchecked growth. For instance, in 2023, 90% of Series A fintech startups reported gross margins exceeding 50%. Esther Ndeti, Co-Managing Partner at Unconventional Capital, emphasizes the importance of timing in funding strategies:

"If you have not proved your product yet, focus on validation first. Seek grants or angel investors first rather than venture capital prematurely."

Sectors like agri-tech and climate tech are gaining momentum, with climate tech alone raising $325 million across Africa in 2024. Debt financing is also becoming a key tool, accounting for 34% of Kenya’s $382 million in funding, making it a viable route for scaling asset-heavy businesses.

Investor behavior is shifting, with average Series A deal sizes dropping from $15 million in 2022 to $8.7 million in 2023. This signals a growing emphasis on quality over quantity. Blended capital approaches are increasingly popular, particularly in climate tech, agritech, and health sectors. The success of Moniepoint, which became Africa’s latest unicorn after raising $110 million in 2024, highlights that investors remain eager to support companies tackling essential challenges.

Government policy also plays a pivotal role, though regulatory inconsistencies and fragmented markets continue to pose obstacles. As Ahunna Eziakonwa from UNDP points out:

"Investment remains scarce, regulations are inconsistent, and markets are frustratingly fragmented."

Bridging the gap between seed and Series A funding – currently at just 5% – is another pressing issue. Startups can improve their chances by showcasing clear revenue models and engaging with investors early. On a broader level, collaboration through groups like the Fintech Association of Kenya and exploring options like listing on the Nairobi Securities Exchange could help address funding challenges. Meanwhile, the rise in mobile subscriptions and digital payments offers additional growth opportunities.

To thrive in Kenya’s evolving funding landscape, startups must strike a balance between innovation and solid business fundamentals, tap into local expertise, and focus on solving real market needs.

FAQs

Why has Kenya’s startup funding shifted focus from fintech to climate-tech and agri-tech?

Kenya’s startup funding landscape is seeing a notable shift, with fintech taking a backseat to climate-tech and agri-tech. This change is driven by several important factors shaping investor priorities.

One major driver is the global emphasis on sustainability and climate action. In 2024, climate-tech startups in Kenya pulled in around $325 million in funding, highlighting the increasing importance of this sector. Investors are clearly drawn to solutions that address pressing environmental challenges.

Kenya’s wealth of renewable energy resources, like solar and geothermal power, has also set the stage for climate-tech innovation. Companies such as d.light and SunCulture have successfully secured substantial investments by tackling energy accessibility and environmental issues simultaneously.

On the other hand, agriculture continues to be a backbone of Kenya’s economy, and agri-tech is gaining momentum as a response to challenges like climate change and the need for greater efficiency. By integrating technology into farming, startups in this space are not only improving productivity but also appealing to investors looking for ventures that combine impact with profitability.

How is Kenya’s renewable energy sector driving the growth of electric vehicle startups?

Kenya’s renewable energy sector is proving to be a game-changer for electric vehicle (EV) startups. With almost 90% of the nation’s electricity generated from renewable sources like hydro, geothermal, and solar, startups are tapping into this clean and dependable energy to fuel their EV innovations. Take BasiGo, for instance – a company focused on creating electric buses to cut emissions and enhance air quality.

On top of that, government incentives, such as reduced excise duties on EV imports, are making it easier for businesses and consumers to embrace electric vehicles. The blend of plentiful renewable energy and supportive policies is setting the stage for EV startups to flourish, all while advancing Kenya’s goals for cleaner, more sustainable transportation.

What hurdles do Kenyan startups face when moving from seed funding to Series A, and how can they address them?

Kenyan startups face a tough road when trying to move from seed funding to Series A. One major hurdle is soaring operational costs, driven by rising fuel and electricity prices, which eat into profit margins. On top of that, market instability and low investor confidence make it difficult to secure follow-up funding. Investors often prefer sticking to familiar business models, leaving less room for bold, untested ideas to gain support.

To tackle these challenges, startups need to focus on creating business models that can scale while showing clear potential for profitability. Building strategic partnerships and tapping into professional networks can increase visibility and trust among investors. Additionally, improving financial literacy and seeking guidance from experienced mentors can help entrepreneurs better navigate the complex funding process.