The young startup scene in Kenya has been locked in a brutal battle against shutdowns since June last year. One of the first casualties was Nairobi-based Kune Foods, which shut down after a year due to lack of funding. Founder Robin Reecht expressed regret, calling it a “failed vision.” This closure seemed to usher in a period of uncertainty, with several other Kenyan startups following suit in the months that followed. These included Notify Logistics, WeFarm, BRCK, Sendy, and Sky-Garden, all citing similar challenges like economic downturn and tightened investment markets.
2024 has seen even more casualties:
iProcure: Agritech Giant Under Administration
iProcure, an agritech startup that had garnered significant attention, entered administration as of May 1st this year. Founded a decade ago by Stefano Carcoforo, Nicole Galletta, Patrick Wanjohi, and Bernard Maingi, iProcure aimed to streamline the agricultural supply chain by connecting suppliers and retailers, while offering inventory management and credit facilities.
In August 2022, the startup secured $10.2 million in Series B funding and conventional debt to expand its operations across East Africa. Despite raising over $17 million in five funding rounds, iProcure faced internal challenges, including cash flow constraints and a high burn rate, which ultimately led to its current financial troubles. The administration process is now overseen by Makenzi Muthusi of KPMG Advisory Services, who stated that the company’s affairs, business, and properties are now under the administrator’s control.
MarketForce: Funding Challenges Lead to Closure
MarketForce, founded by Tesh Mbaabu and Mesongo Sibuti in 2018, recently announced its closure, marking another significant loss in Kenya’s startup ecosystem. Originally a SaaS company targeting large FMCGs and financial institutions, MarketForce pivoted to a B2B marketplace for neighborhood merchants during the COVID-19 pandemic.
Despite initial success and significant milestones, including acceptance into Y Combinator and substantial funding, MarketForce faced insurmountable challenges due to the global funding downturn. Mbaabu highlighted the difficulties when committed capital did not fully materialize, leading to the decision to close operations. The founders are now focusing on a new venture, Chpter, which aims to empower merchants through AI-powered conversational commerce.
Copia Kenya: A Grim Closure Following Staff Layoffs
Copia Global, the parent company of Copia Kenya, entered administration and laid off all 1,500 of its employees just this week. Despite raising over $100 million across eight funding rounds, Copia Global was unable to secure new funding. The company has appointed administrators from KPMG to manage its affairs, with a focus on sustaining its Kenyan unit. However, the Kenyan operations have now been left in ruins following the layoffs and a significant scaling back in key towns.
In a recent statement, Copia Global acknowledged its failure to attract capital on terms agreeable to all stakeholders.
Gro Intelligence: A Unicorn’s Fall
Gro Intelligence, a Nairobi-founded agricultural insights platform, shut down after raising over $115 million in venture capital. Founded in 2012 by Sara Menker, Gro Intelligence aimed to revolutionize agricultural data analysis. Despite initial success and recognition as one of TIME’s 100 most influential companies in 2021, the startup struggled to maintain sustainable revenue streams and faced legal and financial challenges.
The closure of Gro Intelligence highlights the difficulties of balancing ambitious goals with practical business strategies in the agtech sector. The fate of its technology and intellectual property remains uncertain as the company winds down operations.
| S/N | Name of Startup | Nature of Affected Operations | Founders And Their Nationality | Total Funding Amount Raised (USD) | Reasons for shutdown |
|---|---|---|---|---|---|
| 1 | Kune Foods | Total shutdown | Robin Reecht (France) | $1M | Failure to raise funding; high operational costs. |
| 2 | Notify Logistics | Total shutdown | Waweru Nderitu and Hellen Waweru (Kenya) | $370.7K | Inability to break even due to high operational costs |
| 3 | WeFarm Shop | Total shutdown | Kenny Ewan and Claire Rhodes (UK) | $1.6M | Inability to scale |
| 4 | BRCK | Total shutdown | Erik Hersman, Jon Shuler, Philip Walton, Reg Orton (USA) | $4.2M | No reasons adduced but COVID-19 largely blamed. |
| 5 | Sky-Garden | Total shutdown | Martin Majlund (Denmark) | $6.1M | Ran out of cash. |
| 6 | Sendy | Total Shutdown | Evanson Biwott and Don Okoth (Kenya) and Malaika Judd. T (USA) | $26.5M | Economic difficulties. |
| 7 | MarketForce | Total Shutdown of Pilot Product | Tesh Mbaabu and Mesongo Sibuti (Kenya) | $42.9M | Inability to raise fund |
| 8 | iProcure | Total Shutdown | Stefano Carcoforo and Nicole Galletta (Kenya-Italy) | $17.2M | Financial Difficulties; Undisclosed debts being unpaid. |
| 9 | Copia Global | Total Shutdown | Tracey Turner and Jonathan Lewis (USA) | $123M | Inability to raise funds |
| 10 | Gro Intelligence | Total Shutdown | Sara Menker (Ethiopia) | $125M | Difficulty raising funds. |
Common Challenges Facing Kenyan Startups
These high-profile shutdowns highlight the challenges facing the startup ecosystem in Kenya, including:
- Funding Challenges: A “funding winter” with tightened investment limited resources for startups, even those with prior success (iProcure, MarketForce).
- Burn Rate and Financial Planning: Startups struggled with high burn rates and a lack of sustainable revenue models (iProcure, MarketForce).
- Market Validation: Misalignment between products and market needs potentially hindered growth (Gro Intelligence).
- Adaptability: Inability to adapt to a changing funding environment hampered some startups (MarketForce).
- Balancing Innovation and Business Viability: While ambitious goals are important, translating them into a profitable business model is crucial (Gro Intelligence).
The recent wave of startup shutdowns in Kenya starkly highlights the harsh realities of venture capital. This is a crucible moment: will the embers of ambition be extinguished, or will they rekindle into a fire fueled by a more cautious, market-driven approach? Only time will tell if Kenyan startups can rise from the ashes, stronger and more adaptable. One thing, however, is certain: the future of this young ecosystem depends on its ability to learn from failures, embrace financial responsibility, and navigate an ever-changing economic landscape. The coming months will test their resilience, and the world will be watching to see if the Kenyan startup spirit can weather this brutal storm.
