It’s becoming something of a grim tradition in Kenya’s startup scene: every few weeks, another startup quietly — or sometimes not so quietly — heads for the insolvency courts. If you thought Nairobi’s Silicon Savannah was all pitch decks, rooftop events, and crypto experiments, you’ve missed the insolvency notices piling up in the country’s Official Gazette.

The latest entrant to this unfortunate club is Credit Information Systems Company Limited, a small firm now staring down a liquidation petition lodged by Credit Reference Bureau (Holdings) Limited. The hearing is scheduled for June 17, neatly sandwiched between court appearances for other struggling firms in Nairobi’s increasingly crowded Commercial and Tax Division.

It’s not alone. SolarNow Services (K) Limited, the Kenyan arm of what was once one of East Africa’s most promising off-grid solar providers, is undergoing creditors’ voluntary liquidation. SolarNow, headquartered in Kampala and once flush with over $29 million in funding from global impact investors, quietly resolved to shut its Kenyan operations in May. The company’s website has gone dark, emails bounce, and former investors are noticeably silent. The once-celebrated impact darling — praised for its rigorous credit systems and durable solar systems — is now reduced to official notices and creditor lists.

SolarNow’s fall from grace is a case study in something everyone in the ecosystem knows but rarely says aloud: being well-capitalised is not the same thing as being sustainable.

From Billion-Dollar Ideas to Empty Office Chairs

If liquidation notices had a league table, Kenya’s startup scene would be heading for promotion. Medsource, a pharmaceutical procurement platform once heralded for its mission-driven supply chain innovation, recently folded. It wasn’t lack of customers — it was the slow evaporation of grant funding that pulled the rug. Even Lipa Later, a flashy buy-now-pay-later (BNPL) startup with aggressive regional ambitions, has long joined the insolvency tour. It wasn’t supposed to be like this; the firm had raised millions, bought an online retailer, and promised a fintech revolution. Now? Administrators are searching the couches for loose change.

SureChill Africa, meanwhile, once convinced investors to pour £4m into off-grid cooling technology to help clinics and farmers preserve perishables. Today, the firm is under administration, proof that even big cheques and noble intentions don’t guarantee financial survival.

One by one, the logos are disappearing from Nairobi’s startup co-working spaces, replaced by notices from liquidators offering copies of creditor lists “on payment of the regulated fee.”

The USAID Shaped Hole in the Room

What’s behind the recent spate of collapses? Part of the explanation lies across the Atlantic.

In February, the United States announced the closure of its USAID mission in Kenya. Not long after, Congress followed up with cuts to the US Africa Development Foundation (USADF), shaving $51 million from its budget. You could almost hear the air escaping the Nairobi venture capital balloon.

It’s easy to dismiss USAID and USADF as just more alphabet soup in a sea of donor agencies. But these organisations were critical suppliers of the kind of early-stage risk capital that VC firms don’t touch, and that banks won’t lend. In short: this wasn’t hand-holding; it was a necessary crutch.

For example, USADF’s data shows Kenya received nearly $17 million in direct grants supporting women-led SMEs, rural entrepreneurs, and high-risk-but-high-reward social ventures. That funding has now vanished faster than a startup’s Series A runway.

And who’s stepped in to fill the gap? At present, nobody in particular.

Can Local Investors Save the Day?

There’s now a fresh, if slightly awkward, conversation emerging: does Kenya’s tech scene rely too much on international donors and VC funds parachuting in with PowerPoints and ESG slide decks?

The dependency problem is real. And to be fair, it’s not entirely Kenya’s fault. The pipeline for local institutional investors remains shallow. Local pension funds are cautious, local banks demand collateral Kenyan startups don’t have, and domestic angel networks are still small.

In theory, this should be the moment for Nairobi’s much-hyped domestic capital ecosystem to rise to the occasion. In practice, that shift has been slow. The cultural memory of loss-aversion in Kenyan investment circles — burned once by illiquid agritech schemes, twice by dodgy real estate SPVs — is hard to erase with TEDx talks alone.

Meanwhile, insolvency registers keep growing. The wreckage now includes names that not long ago were topping “Africa’s Top Startups to Watch” lists. Remember Kune Foods? Its founder declared it “a failed vision” after it shuttered in 2023. Notify Logistics, WeFarm, BRCK, Sendy, Sky-Garden — they’ve all joined the postmortem lineup. The narrative arc of “ambitious startup, big PR push, painful closure” is starting to feel less like isolated events and more like a pattern.

Funding ≠ Sustainability

The truth that nobody wants to say out loud at the next Nairobi Demo Day is that funding alone doesn’t solve poor unit economics, challenging markets, or weak corporate governance. iProcure, another well-funded agritech startup, secured $10 million in Series B funding in 2022 and still ended up in administration last year. Blaming “the funding environment” only goes so far when internal operational challenges loom larger.

There’s also a macroeconomic reality to contend with: inflationary pressures, fluctuating exchange rates, and shrinking consumer purchasing power are squeezing many startups’ margins. Combine that with the global downturn in venture capital availability, and it’s clear that even promising ventures are being ground down by forces well beyond their control — or their pitch decks.

More Than Money

Perhaps what Kenyan startups need now isn’t just another grant or VC cheque. What they need is breathing room: policy certainty (lots of uncertain and draconian legislation mooted recently_, domestic risk capital, access to real working capital loans, and — dare we say — profitability built on local market fit rather than just growth-for-growth’s-sake.

Maybe it’s time Kenya stopped being the poster child for “impact investment opportunity” and became a slightly more boring, slightly more sustainable hub for resilient, cash-positive businesses. It’s less glamorous — but perhaps more useful.

Meanwhile, back in the Commercial and Tax Division of Nairobi’s Milimani Law Courts, the insolvency hearings continue. Plenty of seats available.