Kenya’s Top Telco Safaricom Floats New VC Firms To Back Startups

By  |  July 7, 2023

In a strategic move to fuel its future growth prospects, Safaricom, Kenya’s leading telecommunications company, plans to establish two venture capital (VC) firms in a bid to capture a larger share of the country’s flourishing tech startup scene. With a focus on identifying, incubating, and investing in startups and scale-ups, Safaricom is set to solidify its position as a key player in Kenya’s rapidly evolving technology landscape.

The incorporation of these new entities is subject to approval from shareholders, which will be sought at the upcoming annual general meeting scheduled for July 28. Safaricom aims to inject capital into both seed-stage and growth-stage businesses as part of its next growth frontier. By investing in seed-stage startups, Safaricom seeks to support the development and growth of technology entrepreneurs while building reputation and trust within the local tech community.

“The incorporation of a company limited by guarantee to invest in seed stage start-ups to support the development and growth of technology entrepreneurs and build reputation and trust within the tech community in Kenya,” Safaricom says in its planned special business agenda for the AGM, as reported by local publication Business Daily.

Concurrently, the telecommunications giant intends to incorporate a private limited company or repurpose an existing subsidiary to invest in growth-stage startups and initiatives that align with Safaricom’s strategic mission for financial returns.

“The incorporation of a private limited company (or alternatively repurposing of an existing subsidiary) to invest in growth stage startups (scale-ups) and initiatives that enable achievement of Safaricom Plc’s strategic mission for a financial return,” the firm says.

This move comes as the Kenyan startup ecosystem experiences rekindled growth, after a bit of a lull that contrasted the early rapid progress which earned the country the moniker “Silicon Savannah.” Kenya’s supportive business environment, growing internet penetration, and its enthusiastic, tech-savvy population have contributed to the thriving startup scene. Safaricom appears to recognise the opportunities in the ecosystem and aims to tap into the innovative ideas and disruptive technologies being developed by local startups.

Over the years, Safaricom, which dominates the telecom and mobile money markets in Kenya by a commanding margin, has actively supported and invested in several homegrown startups. Notable examples include mSurvey, a mobile-first consumer feedback platform; Sendy, an on-demand delivery platform; FarmDrive, a fintech startup providing credit scoring and financial services to smallholder farmers; and Eneza Education, a mobile learning platform.

These investments demonstrate Safaricom’s commitment to nurturing innovation and driving the growth of the tech ecosystem. By partnering with and investing in local startups, Safaricom fosters entrepreneurship and strengthens its position as a catalyst for positive change and technological advancement in Kenya.

As Safaricom’s foray into VC unfolds, it is poised to leverage its established brand, extensive infrastructure, and substantial resources to provide financial support, mentorship, networking opportunities, and market access to promising startups. This strategic move allows Safaricom to diversify its revenue streams, stay at the forefront of technological advancements, and contribute to Kenya’s digital transformation and economic development.

Safaricom’s intensified efforts in Kenya’s startup ecosystem mark a significant milestone for the telecommunications giant and the local tech community. As Safaricom nurtures innovation and invests in the next generation of disruptive startups, it is positioned to shape the future of technology in Kenya and solidify its position as a key driver of the country’s digital revolution.

Several prominent African telcos have recognised the potential of the continent’s startup ecosystem and have dabbled into venture capital investments to support and invest in local startups.

MTN Group has invested in startups such as Jumia, Africa’s leading e-commerce platform, and Flutterwave, a fintech company providing payment solutions. Orange Ventures has backed startups like Kobo360, a digital logistics platform, and PayJoy, a fintech company enabling smartphone financing. Vodacom Group has invested in IoT.nxt, an Internet of Things (IoT) solutions provider and Mezzanine, a virtual reality technology company. Econet Group has supported startups like Liquid Telecom, a pan-African digital solutions provider, and Strive Masiyiwa’s Kwese TV. Liquid Telecom Ventures, the investment arm of Liquid Telecom, has invested in startups such as Twiga Foods, a mobile-based supply platform, and Silvertree Internet Holdings, an e-commerce company.

These telecom giants are venturing into the world of venture capital, aiming to foster innovation, drive digital transformation, and accelerate the growth of startups across various sectors in Africa. Through their investments and support, these telcos are looking to contribute to the development of vibrant startup ecosystems and solidify Africa’s position as a hub for technological innovation.

Featured Image Credits: NTV Kenya

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