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Kenya tops rivals in 2024 venture capital investments
Report shows that 67 percent of Africa's total climate-focused VC funding went to Kenya, further establishing the country as a hub for climate investment.
The Kenyan startup sector received Sh69.4 billion ($537 million) in venture capital (VC) funding in the year to December 31, 2024, a new report shows, beating traditional main rivals such as South Africa, Nigeria, and Egypt.
A new report by research platforms Future Africa and WeeTracker Media shows that Kenya’s haul of VC investment in 2024 from 73 deals, was three percent higher compared to the previous year and was equivalent to 26 percent of Africa's total inflows of $2.07 billion (Sh267.64 billion) for the year.
“Kenya secured the top spot this year, receiving 26 percent of total funding. Egypt, Nigeria, and South Africa followed closely, each receiving more than 15 percent of total funding,” the report said.
The report covers venture capital activity between January 1, 2024, and December 31, 2024. Only deals publicly reported during this period are included in the analysis.
“Together, these four markets accounted for 80 percent of the total funding raised in 2024, underlining their role as the key funding hubs in their respective regions and highlighting the strong network effects that ecosystem hubs have,” the report said.
Kenya is the only country in Africa that posted a growth in the value of VC funding inflows in 2024. All key rivals including South Africa and Egypt posted drops in the value of receipts.
"Kenya was the main beneficiary of the climate boom, receiving 67 percent of total energy and environment finance, making it the top market in Africa with $537 million (Sh69.4billion). This makes Kenya the only country in the top four to see an increase in funding between 2021 and 2024, from $453 million (Sh58.57 billion) to $537 million (Sh69.4 billion)," the report said.
The report shows that Nigeria received $336million (Sh43.45billion) in VC funds through 77deals in 2024, South Africa $371million (Sh47.97billion) from 50 contracts, while Egypt bagged $408million (Sh52.75billion) from 56 transactions.
The report further shows that, unlike the previous years when fintech dominated the African investment landscape, Kenya's success in 2024 was largely driven by climate-focused investments, particularly in clean energy and electric mobility.
The report shows that 67 percent of Africa's total climate-focused VC funding went to Kenya, further establishing the country as a hub for climate investment.
Notable among the largest deals in Kenya were the $176 million (Sh22.75 billion) funding to solar solutions firm d.light, to support the expansion of clean energy, and BasiGo's $38 million (Sh4.91billion) investment to improve electric public transport.
Many of these investments were backed by development finance institutions, which are increasingly focused on supporting Africa's green energy transition.
Kenya's financial and blockchain sector attracted a total of $63 million in funding, largely driven by a single deal with M-Kopa valued at $51 million.
“The significant majority of Kenyan funding was invested in startups led by non-local founders such as d.Light, Roam, Ampersand, and BasiGo and remain a contentious topic in the Kenyan startup ecosystem. Kenya’s finance and blockchain sector grabbed $63 million (Sh8.14 billion) in total funding with the single deal of M-Kopa valued at $51 million (Sh6.59 billion)” the report said.
Additionally, Kenya saw a notable increase in debt funding, with 62 percent of total VC funding coming in the form of debt.
In contrast, only 28 percent of funding was all-equity, highlighting a significant difference from Nigeria and Egypt, where equity remains the dominant funding model.
This shift in funding preference reflects investors' inclination towards asset-backed businesses, particularly renewable energy start-ups and electric vehicle companies, in line with the global trend towards sustainable investment.
However, the growing reliance on debt financing poses potential risks for start-ups, particularly in the context of currency fluctuations and rising interest rates, which could affect loan repayment terms.
