A Pattern of Promise and Failure

The recent administration of Twiga Foods, a B2B startup that raised $185 million from high-profile investors like Goldman Sachs, underscores deeper structural issues plaguing Kenya’s tech sector. While the country has attracted significant venture capital—$984 million in 2023 alone—it lags behind peers like Nigeria and South Africa in producing billion-dollar companies.

The Funding Paradox

A closer look reveals a lopsided funding landscape where debt accounts for 60% of total investments. This favors capital-intensive sectors like solar energy (which captured nearly 70% of Kenya’s venture funding) over equity-driven consumer internet or fintech companies—the typical breeding ground for unicorns.

Beyond Twiga’s Case

The challenges extend beyond this single failure: at least seven high-profile Kenyan startups have closed, entered administration, or scaled back in the past 16 months. These include:

• Copia Global: Rural e-commerce platform that raised $123 million before entering administration
• Koko Networks: Clean-cooking company shut down after government blocked carbon credit revenue
• Lipa Later: Buy-now-pay-later fintech entered administration after failing to secure new funding
• Sendy: Logistics startup became insolvent when a key investor pulled out
• Gro Intelligence: AI agriculture data firm closed after missing payroll and cutting staff
• MarketForce: B2B e-commerce platform also shuttered amid challenges

A Missing Ingredient

The lack of local institutional investment—foreign VCs dominate deal flow—creates vulnerability to global sentiment shifts. When funding dried up in 2023 due to political uncertainty, Kenyan startups disproportionately suffered.

This creates a self-reinforcing cycle where limited exits discourage local investment, which in turn hinders equity-driven scaling and the emergence of true unicorns.