When President Ruto stated that Nigerian men are marrying the priced ladies from Kenya, it sounded like a joke.
However, this reality is more surreal in the startup industry. Over time, it has become a core reality where foreign founders have a comparative advantage, resulting in disproportionate investment.
Companies such as M-KOPA, Opibus, Twiga Foods, Basigo, and Sendy have benefited from having non-Kenyans on the founding team. This is not a new occurrence; in 2019, Kenyan startups with foreign founders or co‑founders attracted $376.7 million, responsible for about 87% of the entire VC funding in Kenya. Also, 70% of investors who raised over $11 million in 2018 are foreigners.
According to a study by Roble Musse, white founders in Kenya have a 47,000 per cent higher chance of getting funding than their black counterparts in the US.
In research by Ben Mkalama and Stefan Ouma in 2024, it was discovered that structural bias exists for Black Kenyan entrepreneurs.
Also, Nancy Masila, the convener of Jasiri Network, said, “Historically, foreign founders/innovators have had an advantage in attracting investment in Kenya. This is partly because many African investors are foreign and tend to back people who look like them, share their networks, or come through international accelerators. As a result, Kenyan founders often face higher hurdles, even when solving more relevant local problems.”
Is it safe to say that Xenophobia exists within the Kenyan technology ecosystem? Investors often require local entrepreneurs to create teams with other foreign partners to achieve significant investment.
This year, the two Kenyan companies with the most important investments (Burn Manufacturing and PowerGen) have foreigners on their founding teams.
The Kenyan government is having difficulty rectifying this problem. While they have removed the 30% equity mandate to allow investment, locals have complained that it will further make the technology ecosystem elitist and make it more difficult for Kenyan inventors.
Truly, the foreign founders have leveraged their global networks to access capital. For example, Twiga’s funding comes from Creadev, Juven, TLcom Capital Partners, and DOB Equity. This is similar to the funding for M-KOPA and Opibus.
The connections often emanate from the experiences, social connections, and educational achievements of these founders. This is a testament to the fact that VC funding primarily comes from outside Africa, where foreign founders could enjoy favourable deals and patronage. Ben Mkalama and Stefan Ouma further discovered that these foreign investors often lean on their rich educational background outside of the continent to attract these investments.
On the other hand, stakeholders agree to see emerging changes in this phenomenon. Nancy acknowledged that “we are seeing more Kenyan-led startups gain visibility, build credible track records, and prove they can deliver returns. Investors are slowly recognising that local founders are best positioned to scale sustainable solutions on the ground in Africa.”
It is not all doom and gloom for local innovators in Kenya. The story of M-PESA demonstrates that solutions provided mainly by Kenyans can become globally competitive. Other businesses include HydroIQ, CheckUp COVA, Pezesha, and HoneyCoin.
One significant discovery is that these 100% Kenyan innovations enjoy relatively low funding. This phenomenon will not abate, considering that foreign founders come from well-funded tech ecosystems that allow easier access to legal advice, compliance expertise, and global investor relations. As a developer or innovator in Kenya, your best bet is to find a foreign partner to attract the required funding.