Kenya Tops Africa as German-Backed Startup Investments Hit $1.88 Billion, New Report Shows.

Kenya Tops Africa as German-Backed Startup Investments Hit $1.88 Billion, New Report Shows.

Sebastian Gentry, Head of Programs at the Westerwelle Foundation.

By Jeff Oyugi

Nairobi - February 13, 2026

Kenya has emerged as the leading destination for German-backed startup investment in Africa over the past decade, with founders attracting significant capital as international investors increasingly turn their attention to the continent’s fast-growing innovation ecosystem, according to a major new report launched in Nairobi.

The Germany-Africa Investment Report includes a Decade of Capital Flows & Ecosystem Growth (2015–2025) that was unveiled at the East Africa offices of the Friedrich Naumann Foundation for Freedom in Gigiri, documenting how African startups secured $1.88 billion in deals through German-supported syndicates across 19 countries. Released by the Westerwelle Foundation through its Africa Investment Bridge initiative, the report shows a dramatic 784 percent increase in German deal participation between 2015–2019 and 2020–2025, signalling growing confidence in African innovation.

Kenya led all markets with 50 German-backed transactions over the decade, reinforcing Nairobi’s status as East Africa’s premier technology hub and gateway for international capital. Nigeria followed with 34 deals, Tanzania with 24, South Africa with 19 and Ghana with 17, with the five countries accounting for 77 percent of all transactions recorded.

Despite the surge in activity, Africa continues to receive only a small fraction of global venture funding. The report notes that the continent attracted just 0.6 percent of worldwide venture capital in 2024, even as it remains the fastest-growing region globally with projected annual GDP growth of about four percent. With the implementation of the African Continental Free Trade Area expected to connect 1.3 billion people, the report argues that Africa represents one of the largest untapped investment opportunities in the world.

“African founders are building solutions that work in agriculture, financial services, health and climate adaptation,” said Sebastian Gentry, Head of Programs at the Westerwelle Foundation. He said the initiative aims to reduce information gaps that discourage foreign investors from entering African markets, noting that structured partnerships with local fund managers can unlock both financial returns and long-term economic impact.

Gentry said meetings with entrepreneurs in Kenya revealed that access to finance remains the most urgent constraint to growth. He added that many international investors are interested in African startups but hesitate due to concerns about limited market data, a shortage of large exits and currency volatility. “There is significant early-stage funding, but investors want to see stronger pathways to Series A and beyond,” he said, adding that some startups address currency risk by registering holding companies abroad.

The report also highlights sector trends, showing that AgTech and Fintech companies captured more than half of all German-backed deals, reflecting Africa’s leadership in agricultural innovation and mobile financial services. Health and education technology ventures have gained prominence in recent years as investors respond to demographic pressures and development needs. German investment exposure peaked at $565.5 million in 2023 before declining due to a concentration of mega-deals rather than weakening fundamentals, with funding rebounding to $3.8 billion in 2025 as deal volumes and counts increased.

Mercy Mukulu, Country Director of the Westerwelle Foundation in Kenya, said the Africa Investment Bridge programme is designed to connect African entrepreneurs with European capital while strengthening local business capacity. Speaking during a networking event held alongside the Africa Tech Summit, she said more than 100 participants attended, nearly half of them from the venture capital and investment sector.

“At the Westerwelle Foundation Kenya, we empower entrepreneurs across all stages, from ideation to acceleration,” Mukulu said, noting that the organisation runs programmes supporting startups as well as micro, small and medium enterprises. She said the foundation’s hub in Mombasa provides co-working space, mentorship and advisory services, helping founders build sustainable businesses capable of attracting investment.

Mukulu said Kenyan entrepreneurs are distinguished by resilience and innovation but face persistent structural challenges, including limited access to finance, scaling difficulties, regulatory compliance burdens and gaps in practical business skills. “You leave school and realise theory alone is not enough,” she said. “Entrepreneurs must learn product development, team building, fundraising and statutory requirements while running their businesses.”

Ida Huiskonen, Director of Community and Marketing at the foundation, said many foreign investors approach African markets cautiously because they lack familiarity with local conditions. She said investors want stronger transparency on financial projections, clearer exit pathways and assurances that returns will justify the additional risk of entering a new market.

Huiskonen added that concerns about currency volatility, infrastructure gaps and the difficulty of expanding across multiple African countries also influence investment decisions. “Investors need to understand how long it will take to reach exits and whether the ecosystem can support growth at the speed they expect,” she said, noting that bridging expectations between mature European markets and Africa’s younger, dynamic ecosystems remains a key challenge.

Kevit Desai, Chairperson of the Economic Development Investment Council, called for deeper structural reforms to attract larger volumes of global capital. He argued that Africa’s share of venture funding remains disproportionately low given its population of more than one billion people and the growing integration of regional markets.

Desai advocated for the development of sector-specific economic clusters in agriculture, manufacturing, tourism, the meetings and events industry and the blue economy, saying such clusters would align policy, infrastructure, academia and industry to create stronger investment ecosystems. He pointed to Germany’s success in building industrial clusters as a model for Africa.

“With the scale of our markets and the progress made in regional integration, the priority now is to ensure that enterprises are sustainable, competitive and linked to global value chains,” he said. He also stressed the importance of standardisation and regulatory alignment, arguing that without common standards African businesses cannot effectively compete internationally or fully benefit from intra-continental trade.

The Africa Investment Bridge initiative is implemented by the Westerwelle Foundation in partnership with GIZ through the SPARK programme, commissioned by Germany’s Federal Ministry for Economic Cooperation and Development.

As global investors search for new high-growth markets, the report suggests Africa’s startup ecosystem led by Kenya may be entering a new phase of maturity. However, speakers at the launch cautioned that unlocking the continent’s full potential will require sustained collaboration between governments, investors and entrepreneurs to address structural barriers and channel capital toward scalable businesses capable of transforming economies across Africa.