Kenya has been edged out of its number two position among foremost investment startup markets in Africa by Nigeria.
The latest StartupBlink Global Startup Ecosystem Index 2022 report shows that the country dropped its global ranking by one spot to rank 62nd behind South Africa (49) and Nigeria (61) in this year’s worldwide ranking.
"The gap between the total score of the two countries is small, suggesting Kenya has an opportunity to reclaim the 2nd spot in Africa next year. It is interesting to note that Kenya has a higher Quantity score and Business score than Nigeria, but has a lower Quality score, resulting in a lower overall rank," the report adds.
According to the report, Nairobi's startup global ranking fell by 27 spots to 163rd, however, it still ranked 1st in Eastern Africa, which comprises Tanzania, Uganda, and Rwanda.
"Nairobi, which ranked 1st in Africa in 2020, has lost 3 positions to rank 5th in Africa, now preceded not only by Lagos, but also by Capetown, Johannesburg, and Cairo," the report added.
Nairobi performed better in fintech (37), energy and environment industry (71), and food tech (80).
Mombasa, which is the only other Kenyan city in the global top 1000 startups, ranks 891.
"After joining the top 1000 for the first time in 2021 at 756th, Mombasa has gone down by 135 spots to rank 891st. Kenya needs to reverse the decreasing trend of its ecosystems in order to reclaim its 2nd position in Africa."
Kenya's mature economy and a growing culture of entrepreneurship offer investment opportunities for local and international startups eyeing the East African market
"In terms of attracting funding for startups, Kenya, along with Nigeria, Egypt, and South Africa, are the top destinations for Africa’s investors."
In quarter one of 2022, capital raised by Kenyan startups from international investors grew by Sh8.2 billion ($70 million) compared to a similar period last year on outstanding fundraising rounds.
The Big Deal, an American newsletter that covers startup deals in Africa shows that a total of Sh56.3 billion ($482 million) was raised by local tech companies between January and March 2022, up from Sh48.1 billion ($412 million) in a similar period last year, representing a 17 percent rise.
The growth comes on the back of successful rounds in Q1 2022, from several local startups such as POA Internet, Twiga Foods, Kune Foods, among others, which raised billions of shillings to expand local as well as regional operations.
Copia Global, an e-commerce platform, raised $50 million (Sh5.68 billion) to expand to the East African region.
The funding round was led by Zebu Investment Partners, the U.S. International Development Finance Corporation (DFC), Koa Labs, Lightrock, German development finance institution DEG, and Perivoli Innovation.
Affordable internet provider
Likewise, affordable internet provider, POA Internet, also secured $28 million (Sh3.18 billion) from Africa50, a financing vehicle backed by the Africa Development Bank (AfDB) Group as well as African Countries.
"Kenya’s public sector has been involved in startup ecosystem development since the 2013 launch of Konza Technopolis, a tech hub built outside of Nairobi,
"The new Startup Bill 2020 was introduced, and if passed will establish a new framework for entrepreneurship in Kenya,” the report points out.
Nairobi is home to global tech giants such as Google, Microsoft, Samsung, and Intel, a factor that makes the city attractive to tech startups.
"Moreover, the presence of accelerators like Antler and Pangea Accelerator contributes to the startup culture.
Some of the notable startups in the country are agri-tech company Twiga Foods, logistic firm Lori, and agri-tech firm Apollo Agriculture. The Global Startup Ecosystem Index is built using data points processed by an algorithm that takes into account several dozens of parameters including the number of startups, the size of the domestic market, and the ease of doing business.
