As venture capital activity slowed globally last year, Kenya defied the odds to record the strongest growth in funding raised in Africa. Reports show the deal count and value to country exceeded 2021 figures due to increased investor interest.
Data from the market intelligence firm briter bridgesY the big deall shows that Kenya raised $1.1 billion, more than double the funding that East Africa’s largest economy raised in 2021, when the continent raised around $5 billion.
another report of Partechwhich excludes the Sun King mega round, also shows that funding from Kenya increased 33% last year, to a record $758 million.
Partech placed Kenya fourth on the list of top VC destinations in Africa, after Nigeria, South Africa and Egypt, respectively.
Briter, which included the country rankings this year, and Big Deal ranked Kenya as the second VC destination after Nigeria, which took the lead after raising $1.2 billion, despite the number of deals and the value decreased. Compared to the previous year, the amount invested in Nigeria dropped by more than 36% according to Partech and 20% according to Big Deal data. Funding from South Africa has stalled according to Partech, while Big Deal data shows a 42% decline.
Reports show that Kenya posted the strongest growth on the continent, as VC funding from Egypt also grew slightly. Overall, Africa reported an increase in the amount invested last year; Partech put the figure at $6.4 billion, Briter Bridges at $5.4 billion and Big Deal at $4.8 billion.
Clean technology and e-commerce
Almost every sector in Kenya saw increased VC interest, however, the cleantech, e-commerce, fintech, and food and agriculture verticals accounted for the lion’s share of activity.
The cleantech sector received the most VC interest in Kenya, accounting for almost half of the total capital raised by Kenyan venture-backed private companies, spurred by the Sun King mega-round and M-funding. Kopa. Both PAY-Go extensions are providers of solar home systems, but M-Kopa’s platform now includes financing for a variety of products and services.
Other cleantech companies that have attracted corporate backing include BasiGo, an electric vehicle startup trying to electrify Kenya’s public transport sector, currently dominated by fossil fuel buses.
Investor interest in cleantech companies aligns with the global trend of the past year that saw more capital poured into businesses that are mitigating climate change. The climate and cleantech verticals, and more specifically in Africa, are expected to continue to attract VC dollars amid the slowdown in funding.
Scaleups in the e-commerce sector such as Wasoko and MarketForce; B2B platforms that allow informal traders to source products directly from manufacturers and distributors, and Copia; an e-commerce platform that leverages its agent network to serve clients in rural areas, also attracted investors. Those mentioned above raised large rounds that saw the vertical emerge as one of the most positively impacted by venture capital financing.
Fintechs also continued to attract the lion’s share of funding on the continent as Africa, the world’s second-fastest payments and banking market, grows. However, in Kenya, the vertical ranked third in VC preference, assessed by deal value. On the other hand, the vertical experienced the most activity in terms of number of deals.
Meanwhile, despite Kenya experiencing tremendous growth last year, the market was not spared from the effects of the VC slowdown, as some companies like Kune and WeFarm went out of business, while others like Twiga, Sendy and MarketForce cut back. their staff as they adjusted to new fundraising realities.
