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Kenya Hasn’t Figured Out How to Put its Local Founders First
from DAWN
By YINKA ADEGOKE
Startups that raised more than $1 million in Africa's largest tech ecosystems (2019)
Only one Kenyan founder raised more than $1 million in 2019
Country Local founders Foreign founders Mixed Corporate venture
Nigeria 12 5 2 3 Kenya 1 11 4 1 South Africa 14 4 7 0
Table: Yinka Adegoke / Rest of World Source: Maxime Bayen, Africa Startups $1M+ Deals Database -2019 Get the data
RECENTLY, a furor broke out on Kenyan social media when a French startup founder, who had only spent a few months in the East African country, seemingly had no trouble raising $1 million in pre-seed funding for his new food delivery app. Meanwhile, local and regional founders say they still have diffi culty pulling together capital after years of attempts.
While talking to a Kenyan tech founder about this, I was reminded of a line from Ngũgĩ wa
Thiong’o’s memoir, Dreams in a Time of War: “Belief in yourself is more important than endless worries of what others think of you.”
Ngũgĩ was recalling a moment of realization from his childhood in colonial-era Kenya, but the quote feels apt today.
In the early 2010s, Kenya’s fl edgling tech ecosystem was used as a shorthand for a wider “Africa Rising” narrative. It was promptly dubbed “Silicon Savannah” as startups sprouted and tech talent flocked to Nairobi.
But by 2016, there were mutterings in local circles about how the funding seemed to be disproportionately favoring North American and European founders who were launching companies in the country. Things came to a head in 2017, when a Village Capital report titled “Breaking the Pattern” appeared to confi rm what many local founders and journalists had been saying: In East Africa, 90% of disclosed startup investments in 2015 and 2016 went to companies with one or more European or North American founders. It’s an issue that hasn’t gone away in the last fi ve years, Adedana Ashebir, regional director for Africa and the Middle East for Village Capital, told me.
Analysis of 2019 data showed that only one of the Kenyan startups that raised more than $1 million that year had a local founder. Four startups had a mix of foreign and local founders, while 11 had expat founders. It’s worth noting that this trend doesn’t apply elsewhere on the continent: In Lagos’ booming tech hub, 55% (12) of the founders identifi ed in the same analysis were Nigerian, while in South Africa, 56% (14) of the founders were locals.
This comparison with other African markets only serves to deepen the frustration of many of Kenya’s long-term tech watchers. So last month when Robin Reecht, a young French founder on a visitor visa, raised $1 million in pre-seed funding for a Kenyan food delivery app called Kune, a collective
eyebrow was raised. But it was a subsequent interview with TechCrunch that really triggered a loud backlash with #KOT (Kenyans on Twitter) and Kenyan social media users. In it, Reecht is quoted as saying that after just three days in Kenya, he noticed it was “impossible” to get “great food at a cheap price” and that his new app would fi x this. Many commentators again raised the specter of “white privilege” in the local ecosystem and what seems to be a clear preference for expat founders. Reecht has since apologized for his comments.
The social media outrage sparked by Kune inspired Stefan Kremer, a 56-year-old German WordPress trainer, to set up the satirical website “Hire A Mzungu.” Mzungu is the Kiswahili word for
foreigner, but often used in common parlance
to refer to a white person. As Kremer’s site has it, “If the main restriction to the access of money is a mzungu within a viable project: Here’s your white nose for hire.”
Kremer, 56, who’s from a small northern Germany town near the Danish border, has been working on and off in Nairobi with local developers
for two years. He told Rest of World that while the website was indeed meant to poke fun, there was definitely a serious point to it. “I see people show up in Nairobi as digital nomads and they get funded for ideas that might not even fi t the local context,” he said. “Whenever I speak to my guys in Nairobi, they have brilliant ideas that solve a problem and sometimes they just need a small [amount of] leverage to get things up and running.”
Kremer’s site shows that there’s a growing selfawareness among expats, founders, and some investors, and that there are now more nuanced conversations going on around the topic.
Phares Kariuki, a veteran tech founder in Nairobi who is on his third startup, said there's nuance in why non-local founders get funded, in addition to structural racism.“In the past, I focused purely on the racism, but once you start going up the layers and start looking at the local problems, you start to accept there are a confl uence of factors, not a single story,” he told Rest of World.
Those factors include what he describes as a weak corporate legal system in Kenya and a large community of expatriates who stay over after working at major international organizations including the UN agencies in Nairobi.
But one obvious issue is that once African
startups get past the very earliest stage of angel investing, almost all signifi cant venture
capital funds originate outside the continent. In Nairobi in particular, most of those funds are managed by foreigners. Kariuki and other founders say that oftentimes, investors don’t fully understand the local context. Or even recognize founders’ local experience or credentials.
That, in turn, creates a similar bias phenomenon that we see in Silicon Valley, where VCs back
founders from a similar background and life experience — except it’s happening thousands of miles away in East Africa. June Odongo, founder of Senga Technologies, a Nairobi-based logistics startup, spent the bulk of her career in the United States before moving back to Kenya in 2016. She describes it as a “looks-like-me-sounds-likeme investing method which, I think, derides Africanism and ignores local expertise required to succeed here.”
This, Odongo said, leads to “investors who aren’t investing in the local entrepreneurs, but instead are often investing in hype.”
Total startup funding for Africa's largest tech ecosystems
(US $ millions)
Chart: Yinka Adegoke / Rest of World Source: Maxime Bayen, Africa Startups $1M+ Deals Database -2019
