Realities on the Ground

Nairobi attracts entrepreneurs who have graduated from some of the top universities around the world, many of them non-Kenyans.

A reality on the ground is that international investors are often more comfortable investing in non-Kenyan start-ups. A Village Capital report published last year found that 90% of funding for East African start-ups went to foreign founders.

One reason for this problem is the lack of local investors in the market – especially for early-stage start-ups that are looking for sub-KSh 10m ($100k) investments. This is likely due to a lack of experience investing in tech, as well as the relative absence of success stories. Another potential reason is international investors’ subconscious biases that may result in them preferring founders with backgrounds similar to theirs.

Despite inefficiencies in the market, the tech start-up ecosystem in Kenya is growing quickly and tech figures to be an important sector in the country going forward. It will likely continue to grow in the coming years. An important factor to watch out for is how investors are able to exit out of the companies they funded.