Venture Capitalism, Startups Crucial For Kenya’s Future

Venture Capitalism, Startups Crucial For Kenya’s Future

Recently, startup incubators such as Nailab and 88mph, in Nairobi have gained ground with young entrepreneurs, providing a healthy environment for the growth of ideas into tangible businesses. On the other hand, venture capital has in turn provided access to capital markets and considerable returns; this however comes with calculated risk-taking on an investor’s part. As such, venture capitalists claim a stake in any business they invest in.

Many young Kenyans, particularly in the hub of Nairobi, seem to have understood this concept. Acumen Fund’s Biju Mohandas, speaking to AFK Insider, said that Acumen Fund invests not only in ideas that sell, but ideas that have been tested and tried, and found to have a “subsection of the future” invested in them.

“But in the end, you need to convince yourself. You don’t have to convince everybody that your idea works,” Mohandas added. There are 9.7 billion people in this world, thereabouts, and perhaps you only need to convince 10 more. If one of them happens to be President Obama, then perhaps you may change the world.”

Small and medium enterprises (SMEs) in Kenya that embrace venture capitalism for their startups have recorded great strides towards success. According to a research carried out on 100 sample venture capital-financed SMEs in Kenya’s major towns, such funds have allowed for diversification and expansion of businesses, resulting in improvement of valued assets and profit margins. The rate of employment has also been seen to increase, thanks to such initiatives.

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Financing sources previously reluctant to fund startups in the onset are now attracted to them.

Such startups were also deemed to have a good structure, allowing for improvement of financial management, debt collection as well as inventory control.

It has also been noted that women are disenfranchised as far as accessing funds to start up ventures is concerned. Women have thus been encouraged to join forums that will ensure access to relevant and helpful information.

President Uhuru Kenyatta’s government has pledged to ensure that the first item on his new team of Cabinet Secretaries’ agenda is to provide an inclusion plan for women and youth across their particular state departments. His administration will prioritize these two demographics by mandating that they receive a third of all government contracts, and focusing public procurements on locally produced goods.

Debra Njeri, a self-employed film journalist and photographer, says that she is nevertheless impressed with the country’s direction, and the new beginnings she has witnessed in her ventures.

“Kenyans have been allowed to have a new voice, crucial to developing and attaining our ambitious dream for the country [Vision 2030]. It’s also important to remember that you need money to drive your passion,” she said.

Wambugu revealed that in his experience in Social Business and Community Management, he has come across many SMEs that have no knowledge of venture capitalism and business development. Once rejected by institutions that offer loans, or if their savings are not enough to bring an idea into fruition, many young entrepreneurs kill their dreams. Frustrated, these would-be job creators return to unemployment or underemployment.

“We are all young; in these corporate boardrooms, event halls and out there in the streets. We are a subsection of the future. What you need is to believe in yourselves and be ethical. Do not forget to inspire others,” Mohandas said.

“It is not just the government’s burden, or the venture capital institutions’ job to make an entrepreneurial Kenyan dream a success,” says Evans. “They should work together, alongside successful and early onset entrepreneurs, to create awareness about venture capital to the Kenyan populace.”