HOW TO RAISE FUNDS FOR STARTING A NEW BUSINESS IN KENYA

•Geoffrey (Önchong'a) Nevine —Editor-In-Chief •
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Kenyan 20 shillings coins

Raising funds for a new business could be as daunting as having your first baby, maybe even worse. Women who haven’t given birth before, do find it difficult to understand how it works let alone bravely experience the adventure. However, after it is done, the joy that she feels overshadows the pain she went through all the while. That is how it works with raising funds for a new business.

It is pretty challenging at first but in the long run – when it begins to pay off, you are grateful for choosing to persevere. The “how” here is not a single or straightforward solution but a list of options that you may consider. In-as-much as you may start with one, there is a high chance that you would use all at different points to facilitate your business. Moreover, I will suggest that the first on the list is considered first before any other one. Without further ado, here are some ways to get funds for your small business:

1. Government Grants and Loans

The Kenyan government offers various initiatives to support entrepreneurship and small businesses:

  • Youth Enterprise Development Fund: Provides loans and grants to youth (aged 18-35) for starting or expanding businesses
  • Uwezo Fund: Offers interest-free loans to women, youth, and persons with disabilities
  • Women Enterprise Fund: Provides credit to women entrepreneurs and markets their products

2. Bank Loans

Traditional banks in Kenya offer business loans, though requirements can be strict:

  • Equity Bank's Jijenge Loan and KCB's Biashara Loan are tailored for SMEs
  • Loans are available in Kenyan Shillings and major foreign currencies
  • Collateral, good credit history, and detailed business plans are often required

3. Microfinance Institutions

Microfinance institutions (MFIs) provide financial services to entrepreneurs who may not qualify for traditional bank loans:

  • Faulu Kenya, Musoni Kenya, and Kenya Women Microfinance Bank are popular MFIs
  • Offer small, short-term loans with more flexible requirements than banks

4. Angel Investors and Venture Capital

Angel investors and venture capital firms invest in high-potential startups in exchange for equity:

  • Angel investors are wealthy individuals who provide capital and mentorship
  • Venture capital firms pool funds from multiple investors to make larger investments
  • Both look for innovative ideas, strong teams, and growth potential

5. Crowdfunding

Crowdfunding platforms allow entrepreneurs to raise small amounts of money from a large number of people:

  • M-Changa, UleFund, and Kiva are popular crowdfunding sites in Kenya
  • Best for product-based businesses or social impact ventures
  • Requires strong marketing to stand out and attract backers

6. Grants and Competitions

Participating in entrepreneurship competitions and applying for grants can provide non-dilutive funding:

  • USAID's Kenya Investment Mechanism offers performance-based grants
  • The Tony Elumelu Foundation and African Entrepreneurship Award provide grants to African startups
  • Seedstars World, Anzisha Prize, and MEST Africa Challenge hold pitch competitions with cash prizes

7. Incubators and Accelerators

Business incubators and accelerators often provide seed funding alongside mentorship and resources:

  • iBiz Africa, Nailab, and iHub are leading incubators in Kenya
  • Pangea Accelerator runs accelerator programs with investment
  • Offer smaller ticket sizes but valuable support for early-stage startups

When exploring funding options, entrepreneurs should consider their business stage, industry, and growth goals. Having a solid business plan, financial projections, and pitch deck can increase the chances of securing investment

Useful links for more information:

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