Kenya’s Tech Hub headed to a whole new level

Kenya’s “Silicon Savannah” technology hub is retooling to put income before activism with a homegrown African tech community rising in this city.

Several bootstrapped but profitable businesses are starting up using technology and the Internet to solve commercial problems connecting the biggest names in technology and finance. Last month, Facebook Inc. and Alphabet Inc.’s Google started a strategic alliance with the iHub, an incubator and co-working space at the heart of Kenya’s tech scene, to reach and train app developers there.

The Silicon Valley companies will tap local talent for coding and product development; they also will train Kenyans in artificial intelligence, cloud computing and machine learning—reinforcing the region’s role as the center for technology in Africa.

Kenya last year was the second-biggest technology hub in Africa in terms of the number of startups that secured funding, trailing only South Africa. But the average amount raised per startup last year declined 85% compared with the previous year, Disrupt Africa data show, from $2.6 million in 2015 to just $402,469 in 2016, relegating it to sixth place by this criterion behind Nigeria, Ghana, Egypt & Morocco.

One fundamental change here is the type of investor attracted to Kenyan tech businesses. Angel investors—often themselves successful businesspeople or returned from the Kenyan diaspora—private equity and specialized technology funds are becoming more involved, just as Western donor agencies and charitable foundations are becoming less active, according to investors and technology entrepreneurs.

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