Last year, despite a slowdown in venture capital (VC) activity globally, Kenya managed to defy the odds and come out on top as the African country with the strongest growth in funding raised. According to data from market intelligence firms Briter Bridges and The Big Deal, Kenya raised a staggering $1.1 billion, more than double the funding it received in 2021 when the entire continent raised about $5 billion.

Another report by Partech, which excluded Sun King’s mega funding round, showed that Kenya’s funding skyrocketed by a whopping 33% last year, reaching a record-breaking $758 million. This impressive performance has earned Kenya the fourth spot on Partech’s list of top VC destinations in Africa, following Nigeria, South Africa, and Egypt, which account for over 70% of the total VC funding in Africa.

Briter Bridges and The Big Deal, on the other hand, positioned Kenya as the second-best VC destination, with Nigeria taking the lead after raising $1.2 billion, despite a decrease in the number and value of deals as compared to the previous year. According to Partech, Nigeria’s funding dipped by more than 36%, while The Big Deal’s data showed a 20% decline. Also, South Africa’s funding remained stagnant, as per Partech’s report, while The Big Deal’s data showed a 42% decline.

Despite this, Africa as a whole reported an increase in invested amount last year, with Partech putting the figure at $6.4 billion, Briter Bridges at $5.4 billion, and The Big Deal at $4.8 billion. Nearly all sectors in Kenya experienced an increase in VC interest, with clean tech, e-commerce, fintech, and food and agriculture verticals accounting for the bulk of the activity.

The clean tech sector in Kenya received the most VC interest, accounting for nearly half of the total capital raised by Kenyan private venture-backed companies, thanks in part to Sun King’s mega-round and M-Kopa’s funding. Both companies offer PAY-Go solar home systems, but M-Kopa has now expanded its platform to include financing for a range of products and services.

Other cleantech ventures that attracted venture capital include BasiGo, an electric vehicle (EV) startup aiming to electrify Kenya’s public transportation sector, which is currently dominated by fossil-fuel buses.

Investor interest in clean tech ventures aligns with the global trend last year of more capital being injected into businesses that are working to mitigate climate change. It is expected that the clean and climate tech verticals, particularly in Africa, will continue to attract VC dollars, even during a slowdown in funding.

In the e-commerce sector, scale-ups like Wasoko and MarketForce, B2B platforms that allow informal traders to source goods directly from manufacturers and distributors, and Copia, an e-commerce platform that serves customers in rural areas through its network of agents, all attracted investors as well. These companies raised large rounds, making the e-commerce sector one of the most positively impacted by VC funding.

Fintech is still a popular funding destination in Africa, the world’s second-fastest payments and banking market. However, in Kenya, fintech was only the third-most preferred sector in terms of deal value. Nonetheless, it still experienced the most activity in terms of deal numbers.

Despite Kenya’s impressive growth last year, the market was not immune to the effects of the VC slowdown, as some businesses like Kune and WeFarm shut down. Others like Twiga, Sendy, and MarketForce had to cut their staff numbers to adapt to the new fundraising realities.

Nevertheless, optimism is high about Kenya’s dynamic tech sector growth. While it’s not devoid of challenges, there’s little to no doubt about its prospects to expand in the coming years.

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