The year 2024 was nothing short of eventful for Kenya’s startup ecosystem. From scaling challenges and closures to inspiring wins and bold expansions, Kenyan startups have faced a year of highs and lows amid a complex economic and political landscape. Here’s a closer look at the stories that defined the year.
A Challenging Start to the Year
The year began with troubling news as Marketforce, a B2B e-commerce startup, scaled back operations in three of its five markets. Founded in 2018 by Tesh Mbaabu and Mesongo Sibuti, the startup had big ambitions, having raised $40 million in Series A funding in 2022. However, macroeconomic pressures and declining funding opportunities forced the company to shift its focus to high-margin verticals like social commerce.
Meanwhile, Twiga Foods, another prominent name in Kenya’s startup ecosystem, got a lifeline when Incentro Africa withdrew a dispute over Google Cloud Services. This move allowed Twiga to renegotiate its terms and stay afloat amid a global economic slowdown and revenue challenges.
Opportunities for Growth
The opening of the Two Rivers International Finance and Innovation Center (TRIFIC) in February marked a significant milestone for the ecosystem. As a Special Economic Zone (SEZ), TRIFIC introduced favorable incentives, including tax breaks and lower corporate tax rates (10% for the first 10 years), making it an attractive destination for startups and investors.
This initiative aims to boost foreign direct investment (FDI) and provide startups with a platform to minimize costs and raise capital efficiently, especially at a time when Kenya’s forex reserves remain under strain.
The Winners: Stories of Success
Despite the challenges, several Kenyan startups managed to secure impressive funding rounds:
- Bio-Logical raised $1.3 million.
- Uncover Skincare secured $1.4 million.
- Pula attracted $20 million in funding.
- SunCulture raised $12 million.
- Chpter garnered $1.2 million.
The e-mobility sector also experienced remarkable growth.
- BasiGo received KSh 1.3 billion from the U.S. International Development Finance Corporation to scale its local bus assembly operations. Additionally, it secured over $300 million in pledges from a Norwegian fund to support e-mobility initiatives.
- Spiro, an electric vehicle manufacturer, expanded its presence in Africa with a KSh 6.5 billion loan from Afreximbank, supplementing the KSh 8.2 billion it had raised in 2023.
In a notable comeback, Uganda’s SafeBoda resumed operations in Kenya after a three-year hiatus. With new products like “SafeCar” and a fleet of electric bikes, the startup aims to redefine urban mobility.
The Struggles: Failed Startups
While some soared, others faced steep declines.
- Copia, which had raised over $100 million, went into administration in June after laying off 1,000 employees. Its ambitious model, which previously seemed promising, faltered under economic pressure and operational inefficiencies.
- iProcure, an agritech startup, shut down in April despite raising $10.2 million in Series B funding in 2022. The company’s rapid expansion plans were undermined by cash flow constraints and unsustainable operational costs.
- Gro Intelligence, an agri-data platform with roots in New York and Nairobi, ceased operations in June. Despite being named one of TIME magazine’s 100 most influential companies in 2021, the startup collapsed under financial stress, leadership challenges, and a flawed revenue model.
Wasoko: A Controversial Victory
E-commerce giant Wasoko faced legal challenges from nine ex-employees but emerged victorious in court. The dispute centered on claims of improper layoffs, but Wasoko successfully defended its actions, paving the way for a merger with Egypt’s MaxAB. The combined entity now operates across Egypt, Kenya, Morocco, Rwanda, and Tanzania, signaling a new chapter for both companies.
A Resilient Ecosystem
Kenya’s startup ecosystem continues to demonstrate resilience, adaptability, and innovation despite economic hurdles. With initiatives like TRIFIC SEZ and the success stories of startups like BasiGo and SafeBoda, the future holds promise for entrepreneurs who dare to dream and adapt.
As 2024 draws to a close, one thing is clear: the journey of startups in Kenya is as inspiring as it is challenging, driven by ambition, innovation, and an unwavering spirit to thrive.
