KENYA – Kenyan startups have outshone their Nigeria and South Africa counterparts to attract the highest funding this year despite the Covid-19 pandemic, a new report shows.

Kenya’s top 10 startup investment funding hit US$174 million compared to US$158 million and US$ 137 million for Nigeria and South Africa in that order.

“The most common destinations for African Startup investment was Nairobi and Lagos.

They account for more than half of all investment deals made in African Startups 2020,” notes the Startup list Africa report.

Three Kenyan startups were in the top 10 largest funding deals on the continent and include logistics company Sendy which attracted US18.3 million.

Others are renewable energy startup Greenlight Planet which attracted US$82 million while agriculture startup Komaza secured US$25.6 million.

Music sharing platform Mdundo, Solarise Africa, Komaza and Greenlight Africa all Kenyan startups signed the top 10 key funding deals in the third quarter of 2020.

Renewable energy and healthcare startups overtook fintech’s to become the main beneficiaries as investors sought to diversify their portfolios.

Total funding to Africa’s startups has risen from US$43.8 million in 2015 to US$245 million in 2020.

“Kenya is attracting good money, but we have few good founders compared to Nigeria, we need to work on our capacity,” said Sam Gichuru, founder of Nailab.

The report captures startup funding for the 10 months to October 2020.

So far in 2020, Series A rounds accounts for the most 27 per cent deals compared to other rounds.

In the third quarter, however, private equity rounds were the order.

The total number of deals in Africa however declined from 50 last year to 38 in 2020 due to the pandemic.

Two thirds of the deals were either pre-seed, seed, or pre-series A.

That category attracted US$51 million.

They were done in Egypt, Kenya, Nigeria, South Africa, and Tunisia.

Series A deals were worth US$183 million in Kenya, South Africa, Nigeria, Ghana, and Egypt.

Series B deals worth US$137 million were closed in Kenya, Nigeria, Egypt, and Ghana while series C deals totalling US$202 million were closed in Kenya and Ghana.

Series D funding rounds were only in Egypt and South Africa.

Lack of startup funding, high cost of doing business are the key factors facing African entrepreneurs. 

The local startups system is struggling from lack of local angel investors which gives foreign founders a head start.

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