Kenya has slipped from its position as Africa’s top startup funding hub, with Egypt leading the continent in the first half of 2026. Data from Africa: The Big Deal shows that Kenyan startups raised $126 million (Sh16.3 billion) between January and June, placing the country third behind Egypt and Nigeria.

Egypt attracted $327 million (Sh42.3 billion) in funding, while Nigeria secured $254 million (Sh32.9 billion). South Africa ranked fourth with $83 million (Sh10.7 billion) raised. Kenya’s funding performance in the first half of 2026 marks its lowest level since early 2021 and a sharp decline from $227 million (Sh29.37 billion) raised in the same period last year.

Funding Landscape and Market Dynamics

The decline in Kenya’s startup funding coincides with heightened investor scrutiny on sustainable business models, especially following several high-profile startup failures in 2025. Notable companies such as Koko Networks, eBee, and Lipa Later either ceased operations or restructured amid financial challenges.

According to the report, Egypt’s share of total African startup funding reached its highest since tracking began, while Kenya’s dipped to a five-year low. The tracker also noted that the figures exclude electric mobility company Spiro’s $327 million raise, which has now been reclassified as Pan-African due to its operations spanning Nairobi and Dubai.

Regional Startup Funding Overview

  • Tanzania emerged fifth with $52 million (Sh6.7 billion).
  • Côte d’Ivoire followed with $45 million (Sh5.8 billion).
  • Morocco raised $28 million (Sh3.6 billion).

Kenya ranked third in the number of startups securing deals over $100,000, with 25 companies, trailing Nigeria’s 40 and Egypt’s 26 but ahead of South Africa’s 19.

Investor Sentiment and Sector Focus

Industry insiders highlight a shift toward cautious capital deployment, with investors prioritizing ventures demonstrating clear paths to profitability. Push Venture Capital’s Benjamin Singh emphasized a "flight to quality" in 2026, where funding favors startups with strong unit economics.

Across Africa, startups raised $1.36 billion (Sh176 billion) in the first half of 2026, a slight dip from $1.44 billion in the same period last year. Fintech and logistics sectors dominated funding, collectively attracting 76% of total investments, amounting to $556 million and $472 million respectively.