Understanding Startups Ecosystem in Kenya: Drivers, Challenges, and Opportunities

Stephen Muathe^1, , Paul Sang¹, Lucy Kavinda¹, George Kosimbei¹, Sammy Letema¹, Simeon Nyachae¹, Salima Kiriago¹, Kenneth Chelule², Erustus Ouko³, Margaret Mutua⁴ and Samuel Maina¹

¹Kenyatta University (KU)

²Kenya Industrial Research and Development Institute (KIRDI)

³Mega Cap Limited

⁴1 Million Start-ups

Cite this paper:
Stephen Muathe, Paul Sang, Lucy Kavinda, George Kosimbei, Sammy Letema, Simeon Nyachae, Salima Kiriago, Kenneth Chelule, Erustus Ouko, Margaret Mutua and Samuel Maina. Understanding Startups Ecosystem in Kenya: Drivers, Challenges, and Opportunities. Journal of Business and Management Sciences. 2022; 10(3):138-146. doi: 10.12691/jbms-10-3-5

Abstract

Over the last 10 years, maturity of the business landscape has unlocked new opportunities in Africa, especially the entry of accelerators, incubators, and other start-up ecosystem players. These organizations are constantly adapting their models to respond to the ever-changing needs of the ventures they support. Therefore, there is need for existing literature to keep abreast with this vitality to strengthen the ecosystems in Kenya. The paper analyses the drivers, challenges and opportunities within the start-up ecosystem in Kenya. The paper is based on cross-sectional and longitudinal designs. Human-centred purposive and proportionate stratified random sampling techniques were used to select a sample of 74 respondents who filled an electronic survey; coupled with interview of 50 start-ups ecosystem players. Descriptive statistics and content analysis was used in data analysis. The study reveals that Kenya has made significant strides in the start-up scene, however, there is a heavy concentration of activity in Nairobi the capital city, leading to disparity within the country. Opportunities for collaboration are bypassed in favour of duplication of programs and consequently funds that should ultimately support entrepreneurs are spread thin. a number of challenges bedevilled start-ups, access to financing and risk capital, lack of sector coordination, weak start-up culture, me too businesses, insufficient policies and guidelines on incubation and commercialization, and lack of a robust monitoring, evaluation and learning system. The study recommends that the national government should provide matching funds for venture capital, standardization and decentralization of innovation and incubation centres countrywide, central database for start-ups and sensitization and awareness-building programs on intellectual property rights among start-ups.

Keywords:
start-up challenges ecosystem incubation accelerators tech-hubs Kenya

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