Silicon Valley, situated in the South San Francisco Bay Area, California, is the biggest and unarguably the most popular tech ecosystem globally. It is home to Apple, Google, HP, Visa, eBay, Facebook, Nvidia, Adobe, and PayPal.
The presence of these companies in Silicon Valley has made it home to thousands of startups. Unsurprisingly, startups from this area attract the most funding from venture capitalists.
The Silicon Valley-style ecosystem has been exported to other parts of the world, including Africa. Now, it is common to hear about Lagos (Nigeria), Nairobi (Kenya), Cairo (Egypt) and Cape Town (South Africa) tech ecosystems. These are the most prominent tech ecosystems in Africa, and startups in these countries are attracting millions of dollars from local and foreign venture capitalists, private equity firms, and angel investors. They are also being admitted into accelerators like Y-Combinator (based in Silicon Valley) and Techstars.
Alongside this emerging tech ecosystem across the big four mentioned earlier, startups offer innovative solutions to some of Africa’s biggest challenges. For example, there is Zwarttech, a social impact that connects senior IT experts in Africa to international jobs. These well-paying and competitive jobs are expected to boost the economic status of engaged experts. In addition, Paystack, acquired by Stripe, offers B2B payment services and Mpesa, the Kenyan fintech that provides financial assistance to the unbanked and underserved.
Hence, it is unsurprising that a large chunk of these startups are raising a lot of money from venture capitalists, private equity firms and angel investors. Kenyan startups raised some of the biggest funding in 2020.
According to the 2020 African tech startup funding report authored by Disrupt Africa, the combined raised capital US$190 million. Fifty-nine startups increased the funding. The investment ranges from different sectors, including logistics, HR, energy, fintech, edtech, e-health, retail, and construction. Some startups that raised the funding are Twiga Foods, oKHi, Ilara Health, Pezesha, etc.
The $US190 million raised by the 59 startups made Kenya the country that attracted the most funding in 2020. A total of $US701.5 million worth of investment was made in 397 startups in 2020. It edged out Nigeria (85 startups), South Africa (81 startups), and Egypt (82) in the raise to attract funding. This year (2021), more than 300 startups have raised more than Us$1.1 billion, according to figures from Disrupt Africa.
Beyond attracting funding, Kenya has several entrepreneurial hubs supporting and incubating startups and helping them scale their innovation. These hubs are essential to the Kenyan tech ecosystem because they provide training, advisory to startups, and they usually catalyze startups to their success.
Currently, there are 618 active tech hubs and co-working spaces across Africa, according to Briter Bridges and the GSMA. Kenya has 48, including iHub. Nairobi Garage, Nailab, and Metta.
Furthermore, Kenya has the most significant number of coding schools in Africa, according to Briter Bridges. Additionally, M-Pesa, the Kenya fintech giant, is pushing and promoting financial inclusion in the country and offering financial services to the unbanked.
Amidst this boom in the Kenyan tech ecosystem, there is the need to regulate it to ensure best practices. Accordingly, on 14 September 2020, the Kenyan Senate proposed the Start-up Bill (the Bill).
“The Bill seeks to govern the interactions between the government, incubators, startups, and investors; to foster a culture of innovation and entrepreneurship; and crucially, link startups with public and private investment, and research and development institutions.”
The Kenyan tech ecosystem has a bright future. It is one of the most structured and organized in Africa, and importantly it has the backing of the government. It can only get better for the country that is the powerhouse and heartbeat of East Africa.
