The ICT Funding Gap in Kenya
13 March 2012
Afrinnovator - March 12, 2012
While capital has flowed rapidly to satisfy the needs of the largest and — thanks to the microfinance boom – the smallest African companies, SMEs have fallen into a “missing middle.” SMEs in the missing middle are starving for capital. They are too large for micro-finance institutions, too small for main-stream private equity and not serviced by commercial banks, which prefer to focus on high-value, low risk corporate clients. – From Open Capital Advisors, “The Missing Middle”
One of the often cited challenges many startups in Kenya (and much of Africa) face is that of finding relevant funding for their startup especially in the earliest stages, what is known as seed funding.
The situation has somewhat improved over the past few years but still there seems to be a gap remaining. In recent times, some innovators and entrepreneurs have found an aveue to get the funding they need through participating in pitch contests such as IPO48 and others.
The Capital Markets Authority (CMA) of Kenya, fairly recently carried out a research study and published a report titled, “Impact Investing: Challenges and Opportunities in the East African ICT Sector”. The report sheds some light on the funding situation in the region.