The East African Development Bank is proposing to set up a venture capital fund to invest between $100,000 to $1 million in companies who have turnover over $100,000 and are prepared to give the fund shares in exchange for capital invested. Expressions of interest to be sent to venturecapital@eadb.org
State of the VC
Is Kenya ready for VCs? Do we have the expertise and are they necessary?
The regulations for the VC industry are yet to be formalized and the Acacia Fund remains the only venture capital firm licensed by the CMA. But there are other players such as ICDCI, investment advisers, investment companies, and entities like Transcentury who can arrange equity-based financing for viable companies.
Given the archaic company laws and endless court processes, entrepreneurs in Kenya have to be very careful about who they let in as equity partners. They feel better off borrowing from a bank that they can pay off and walk away from after a while instead of having VC as partner/co-owner.
The VC route is more suitable for established companies who have a good long-term understanding of their requirements and the benefits that are offered by different equity partners.
A more viable, non-VC option for start-ups is the government’s proposed youth enterprise fund which was gazetted in December. (read more)
