👋 Hello, East Africa! Habari, Kenya! 🇰🇪
East Africa has claimed 21% of all start-up funding in Africa since 2019, 84% of which went to Kenya alone.
I have been in East Africa for the past week or so - first in Kigali, now in Nairobi - and as I always do, I looked at funding numbers before I got on the plane. And then I thought: Why not share some of those with this smart bunch?
First of all, I wanted to see how East Africa (as defined by the African Union) is doing in terms of start-up funding, compared to its relative GDP and population weight. The region is host to ~29% of Africa’s population and generates ~16% of its GDP. Comparatively, over the past 5 years East Africa has attracted 21% of all funding on the continent (equity + debt + grants…). Of the $3.4b raised by start-ups in East Africa since 2019, 90% was in the form of equity. The region’s weight evolved over time: from 17% of the continent’s total equity funding in 2019, it grew to 28% in 2020 before falling quite dramatically to 10% in 2021 and picking back up to 29% in 2022. In 2023 so far, East Africa is claiming 17% of the equity funding (23% if we add debt and grants), therefore below the 5-year average (20% & 21% respectively).
That said, it feels almost artificial to talk about East Africa as a region, given the prevalence of Kenya. Indeed, 84% of all the funding raised in East Africa since 2019 was raised by start-ups in Kenya. In 2023 so far, this percentage currently stands at 94% (85% if we only consider equity), its highest level since we’ve started recording data. This is much much higher than Kenya’s share of the regional population or GDP (13% and 26% respectively).
No other East African market has ever claimed more than $100m in funding in any given calendar year. Tanzania was close in 2021 with a total of $96m announced that year, mostly driven by Zola Electric’s $90m raise in September; the country’s attracted 7% of the overall funding since 2019. Uganda comes third with 5% of the total. Start-ups in Ethiopia - the largest country in East Africa both in terms of population (29%) and GDP (26%, neck and neck with Kenya) - have only attracted 1.6% of the regional funding since 2019 (0.4% in 2023 so far). Rwanda is the only market beside Kenya where a $10m+ deal has been recorded in the region in 2023 thanks to Kasha’s $21m Series B in July; this deal was also the first $10m+ deal ever recorded in the country.
Voilà , that’s it for today! I guess next time you’ll hear from me, it will be with an update on October fundraising. In the meanwhile, if you miss us, you can always (re)watch our quarterly round-up here, or access the full underlying database to play with the numbers yourself: here (or here with a discount). Ciao! Max
Dear Kimenyi,
Thank you very much for your comment.
The question of ownership is indeed a very important one. You might have actually noticed that we caveat this by not talking about 'Kenyan start-ups' or 'African start-ups' but instead 'start-ups in Kenya' and in Africa (unless our tongue slips).
Our database includes the names of CEOs and co-founders for each start-up/deal, so you could technically add an expat/local dimensions. We have done it with gender for instance. However, when we have considered running analysis on 'ethnicity' or 'nationality' in the past, we found it very hard for us to gather the data (if we base it on passport ownership for instance), but also to set clear criteria to be used for this analysis.
As I said many times in the past: I would be very happy to work with a researcher who would have built a robust approach to criteria setting and data collection on the topic. Unfortunately, no one's ever stepped forward so far.
Max
What are the possible causes for Ethiopia to have a low funding?