Fintech ventures more common in Kenya, but e-commerce better funded

Fintech startups account for nearly a third of Kenya’s tech startup ecosystem, but e-commerce and retail tech companies are by far attracting the most funding, at least lately.

It follows Kenyan Startup Ecosystem Report 2022published by startup-focused news and research company Disrupt Africa last week.

Since the launch of its research branch in 2016, Disrupt Africa has built up a significant portfolio of publications, notably African Tech Startups Funding Report and Finnover for Africaavailable for free to all via open-source initiatives with various partners across the continent’s technology ecosystem.

The Kenyan Startup Ecosystem Report 2022its 19th publication and fourth country-focused report, has been published in collaboration with Capital of Quona, NEAR Kenya, MarketForce, Newtown Partners, Enza capital, Cellulantand AAIC investmentand is also available for free.

It finds that fintech is the leading sub-sector of the Kenyan startup space in terms of activity levels, with 93 of the startups tracked (30.2%) being fintech ventures, almost three times more than the next largest sectors – e-health and agri- tech.

This trend is not unusual, in fact fintech occupies the top position in most African countries as it solves fundamental problems for the population, is an area where new technological solutions tend to be well received and quickly adopted, as well as offering attractive return for investors.

The most popular areas of focus for Kenyan fintech startups are the payment and remittance area (24 ventures; 25.8 percent of fintech companies) and the lending and financing area (21 startups; 22.6%). This is again no surprise, as these areas cover many of the most basic financial services that are still lacking for large sections of the population; and historically, these categories have been the starting point for fintech ecosystems across the continent.

In Kenya, corporate governance ranks third, with 17 companies accounting for 18.3 percent of total active businesses; while in fourth place is insurtech for 13 companies (14%). Kenya’s remaining startups are spread across the investtech, personal finance, blockchain, security and ID, open finance and “other” categories.

Fintech can lead for activity, but not for funding

In the nearly eight years since Disrupt Africa began tracking financing data in Africa (2015-2022), Kenya has been the second most popular investment destination on the continent, after Nigeria. At least 242 Kenyan startups have secured funding, totaling at least US$1,281,918,200.\

While the fintech space in other leading African startup ecosystems is a clear favorite for investors, investment in Kenya flows a bit more evenly. While fintech generally accounts for the lion’s share of funded ventures, in terms of total funding secured, a handful of sectors have come out on top in the years since 2015. Agri-tech and energy have at various points been the recipients of the most capital. generally depending on whether it was Twiga Foods or M-KOPA Solar that secured a bumper round that year, while in 2022 e-commerce and retail technology have emerged as a dominant force.

In 2022, e-commerce and retail technology dominated, with 14 startups securing a combined US$230,796,000. This amount represents just 20 percent of all Kenyan startup funding, ever, with large rounds for Copia, MarketForce and Wasoko accounting for the majority this.

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The Kenyan Startup Ecosystem Report 2022 is available to everyone for free, making the data and analysis on the pages available to those for whom the information is most valuable – entrepreneurs.

The publication, which is the 19th published by Disrupt research, provides a detailed overview of the Kenyan startup ecosystem and its evolution over the past 5-10 years. It involves analysis of the areas startups are active in, a detailed look at funding and M&A trends, and details on the range of startup support services available to Kenyan entrepreneurs, including hubs, incubators, accelerators and government, corporate and university initiatives.