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    Kenya Hit by New Wave of High-Profile Startup Shutdowns

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    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/NName of StartupNature of Affected Operations Founders And Their NationalityTotal Funding Amount Raised (USD) Reasons for shutdown
       
    1Kune FoodsTotal shutdownRobin Reecht (France)$1MFailure to raise funding; high operational costs.
    2Notify LogisticsTotal shutdownWaweru Nderitu and Hellen Waweru (Kenya) $370.7KInability to break even due to high operational costs
    3WeFarm ShopTotal shutdownKenny Ewan and Claire Rhodes (UK)$1.6MInability to scale
    4BRCKTotal shutdownErik Hersman, Jon Shuler, Philip Walton, Reg Orton (USA)$4.2MNo reasons adduced but COVID-19 largely blamed. 
    5Sky-GardenTotal shutdownMartin Majlund (Denmark)$6.1MRan out of cash.
    6SendyTotal Shutdown Evanson Biwott and Don Okoth (Kenya) and Malaika Judd. T (USA)$26.5MEconomic difficulties.
    7MarketForceTotal Shutdown of Pilot ProductTesh Mbaabu and Mesongo Sibuti (Kenya)$42.9MInability to raise fund
    8iProcureTotal ShutdownStefano Carcoforo and Nicole Galletta (Kenya-Italy)$17.2MFinancial Difficulties; Undisclosed debts being unpaid.
    9Copia GlobalTotal ShutdownTracey Turner and Jonathan Lewis (USA)$123MInability to raise funds
    10Gro IntelligenceTotal Shutdown
    Sara Menker (Ethiopia)
    $125MDifficulty raising funds. 
    Kenyan startup shutdowns. Data captured shutdowns from 2023 to June 7, 2024

    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.

    Charles Rapulu Udoh has carved a niche at the forefront of Africa’s booming tech scene. With years of experience, Udoh has become a go-to expert for multi-million dollar deals in venture capital, private equity, and intellectual property across a vast landscape — from Delaware and New York to Singapore and South Africa. But his expertise extends beyond just the legalese. Udoh is also a corporate governance, data privacy, and tax whiz. An award-winning writer and researcher, he’s passionate about chronicling Africa’s startup story, cementing his position as a true pioneer in the field.

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