Fear & Mistrust Leave Kenya’s Corporate Giants With Startup ‘Cold Feet’

Kenya’s established corporations have long been urged to stop watching from the sidelines and start playing the startup game as the continent buzzes with entrepreneurial energy. But a new, landmark report reveals a corporate sector hobbled by conservatism, internal bureaucracy, and a fundamental distrust of the very innovators who could secure their future.

The study, “Corporate Venture Capital in Kenya: State of Play,” prepared by Viktoria Ventures for the UK-Kenya Tech Hub, paints a picture of a nascent ecosystem with enormous potential that remains largely untapped. While global corporate venture capital (CVC) has exploded, with investments soaring past USD 130 B in 2024, Kenya’s giants have largely limited their forays to branding exercises and low-risk accelerator programs.

“The consensus among the interviewees was that CVC is still in its very early stages in Kenya,” the report states, noting that aside from a few pioneers, large-scale, dedicated investment vehicles are yet to emerge.

The standout exception is telecoms leader Safaricom. Its Spark Fund, launched in 2014, has evolved from a pure investment fund into the Spark Accelerator, a collaborative platform with M-PESA Africa and Sumitomo Corporation, which has backed 19 startups—including Chpter and FlexPay—in its first two cohorts.

“Senior Leadership at Safaricom views CVC as a core driver of both revenue growth and social impact,” the report notes, highlighting a board-level commitment to co-creating with startups in sectors like agriculture, education, and healthcare. This approach has already generated direct revenue and boosted transaction volumes through its vast M-PESA network.

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Elsewhere, the story is one of caution and half-measures. Investment firm Centum serves a contrast. Between 2016 and 2018, it deployed ~USD 500 K into six early-stage startups. The initiative, however, was housed under its Foundation, treating it more like Corporate Social Responsibility than a serious strategic business unit.

“Only one of the six companies… remains active today,” the study finds.

The report concludes the initiative lacked dedicated resources, strategic alignment, and was too small to matter to Centum’s core business. Executives now believe a more scalable model would involve partnering with specialist fund managers—outsourcing the heavy lifting they couldn’t manage internally.

The report identifies a deep-seated cultural and structural resistance. Corporations are “very conservative,” it states, preferring stable, fixed-income investments. Fiduciary duties, competitive return benchmarks, and the risk of diverting focus from core activities are repeatedly cited as barriers.

“Hardly any corporates in Kenya will be ready to go straight into investing in startups off their balance sheets,” said Nduati Maina, Chief Operations of intermediary KCK Global, in an interview for the report. He points to a “general lack of awareness and understanding” and complex governance as major roadblocks.

The consequence of inaction is significant. “They can see that if they don’t take action, they will be left behind,” Maina said, driven by technological disruption and shifting markets.

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Perhaps the most significant hurdle is a pervasive “atmosphere of mistrust.” Startups fear corporates will steal their ideas or bully them; corporates worry about losing control and ownership. Their timelines are also wildly out of sync: startups need years to grow, while Kenyan corporates are often looking for “relatively quick wins.”

This is where intermediaries like KCK Global and Endeavor aim to bridge the gap, translating between the slow, steady language of the corporate boardroom and the agile, high-risk world of the startup.

The report looks to Brazil and Chile for inspiration. Brazil’s CVC scene exploded from niche to mainstream in just a few years, with over 100 active units, after international corporates led the way.

Among the key fixes proposed is a robust, growing private sector as an essential bedrock for CVC, as well as explicit government incentives, similar to South Africa’s B-BBEE policy, which can drive corporate investment. It’s also recommended that corporations be viewed as integral players in the national innovation system, not just sponsors.

The path forward demands a shift from tentative pilots to core strategy. The report calls for corporations to embed innovation at the highest level, for the government to create a fertile policy landscape, and for startups to forge commercial partnerships that go far beyond a simple cheque.

Feature Image Credits: WSJ