Last month, 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 difficulty pulling together capital after years of attempts.
While talking to a Kenyan tech founder about this last week, 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 fledgling 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 confirm 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 five 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 identified 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 fix 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 fit 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 self-awareness 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 confluence 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 significant 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-like-me 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.”
The only way to address this is to have more angel and venture capital that’s rooted in the local economy, said several interviewees. “Ultimately you need to strengthen a local investor class that cares about the market,” said Ashebir. “Foreign founders are not going to stop coming to the continent.”
Iyinoluwa Aboyeji, founder of Future Africa, who has focused on building a venture fund with a mix of local and foreign capital to back local founders, argued that foreign investors in Kenya need to show more accountability for how they’re using funds.
“You’ve come to Nigeria or Kenya, and want to invest in local businesses, but you barely live in the country, or live in an exclusive enclave of the country. Who’s holding these investors accountable when they claim there’s no pipeline of [entrepreneurial] talent, but they’re barely engaged with the ecosystem?” said Aboyeji, a Nigerian who co-founded Andela and Flutterwave. “If it’s not our capital, we can’t argue, even if we see it’s not being well-allocated.”
Indeed, Lagos has now eclipsed Nairobi’s early tech boom, benefiting from not just a larger national economy and talent pool, but also the rise of homegrown tech entrepreneurs like Aboyeji who, alongside local angel networks, have given back to the next generation of founders by investing in their ideas.
Which brings us back to that Ngũgĩ line on self-belief. The second half of that quote perhaps captures what’s at stake for Kenyan tech leaders who want to rebalance the local ecosystem both in terms of founders taking chances and local capital flowing to venture funding.
“Value yourself and others will value you. Validation is best that comes from within.”