Tag Archives Startups

Why do Highly Funded Startups Fail?

Posted on 4 min read

After almost ten years in operation, one of the most funded startups in Kenya – Sendy – recently closed shop. This comes after Sendy ran out of funds. Sounds weird? Yes, the company that was valued at over KShs 10 billion late last year ran out of money to pay salaries, rent, watchman… etc.

This seems to surprise many people who assume that a highly funded startup ought not to fail. Sendy had so far received almost KShs 4 billion from investors and as of mid-2023, it had spent all that money and was not making enough profits to survive without the need for external funding. How and why did this happen? How can a business burn through KShs 4 billion and still not make money?

Sendy is not the first highly funded startup in Kenya (and in the world) to fail. Kune Foods, Notify Logistics, WeFarm, and BRCK are some of the many that have recently met their demise in the rough waters of the Kenyan economy. To understand why all these startups fail, there is one misconception that people need to get rid of; that the death of a business is something strange or unexpected.

Death is Written

One thing is certain in business: death. It can come from natural causes (like Covid) or human causes (like mismanagement), but it will come sooner or later. It’s just a question of when. Death is more certain than taxes because some clever business people can avoid paying taxes. But death. Death is inevitable, and the average business today only lasts 17 years. In 1958, it was 61 years.

If you don’t believe me, try to name three famous companies that have reached their 200th anniversary.

This is especially true for startups, which tend to die faster than other businesses. Worse if they are tech startups. Tech startups have a short and flashy life, like Simon Makonde. They sprout up like mushrooms and in no time, they are worth more than many solid companies (Uber has a bigger market cap than Honda). And then, before the management can take their seats, tech companies disappear and leave no trail. Thus, it should not shock anybody that a tech startup closed shop.

 Big Money, Short Life

Nevertheless, we would at least expect that highly funded startups would be better at escaping death. After all, money can cure a lot of things. Why then does a startup that has received KShs 4 billion end up not taking off? Are you saying that all that funding could not translate to a profit?

To answer this question, we need to understand what funding and valuation mean.

What determines the worth of a startup? It depends on market size and potential, and that is valid if the startup will be able to execute its vision. But even the potential of a startup is very subjective. At the end of the day, if a startup can tell its story very well and convince potential investors, money will rain. Whether that translates to profit is a different story altogether.

Funding is essentially a vote of confidence in the future of a startup, not the current state. Investors make a (calculated) bet and hope that their investment will pay off. When you hear that a startup is valued at x amount of money, it does not tell you how profitable the business is. The simplest deduction you can make is that some people believe that the future of the startup is big. Remember that those investors can (and often) get it wrong. In other cases, investment in startups works like a pyramid scheme where initial investors make their money and exit, and the last person will be left with a dead body in their hands. Only time can validate a bet made by investors.

The investors also know that they are making a gamble. Usually, the strategy is to identify several high-value startups and invest in them. Most will fail, but a few will succeed and earn you more than enough to cover your losses from the failed ones.

Back to Sendy

Sendy had a big dream. Imagine a Kenya where every delivery was done by Sendy. Online shopping, parcel delivery, retail goods, construction materials… that is a big market and if Sendy could hack it, they could have become an elephant (or a unicorn). Imagine the possibility of enabling a trader from Kitui to sell curio to buyers in Kumasi, both by moving the goods and facilitating payment. What a dream!

But in the real world, all dreams are not valid. To achieve that Sendy needed a miracle. They tried, they needed more time to keep trying and make it work, but they ran out of money before the dream could be realized. They were a big plane trying to take off from a short runway, and no one was willing to give them money to extend the length of the runway they had. The only way out was to abort the take-off.

Armchair experts are full of ideas on what Sendy could have done differently, but remember, it is never that obvious.


The Challenge of Turning an Idea into an Income

Posted on 5 min read

Tech product engineers consider themselves to be the geniuses of the 21st century. They have disrupted the world with both hardware and cutting-edge software, and are still working on some cool stuff that you probably have not heard about. Programmers claim that they rule the world and that the solution to every problem facing the world is just a few lines of code away. This fuels the drive to create the next tech startup with the goal of becoming a unicorn.

However, often these dreams never come to be, in some cases, leaving a very demoralized potential founder.

It always starts with a person with an idea; the next big thing. But an idea on paper does not translate into a successful venture, or as they say in Kenya, vitu kwa ground ni different (on the ground things are different). Many software developers who started a venture with a product slowly abandon their pet projects and become resellers of existing products, or go into employment. It does not take long for someone to realize that it is easier to resell a product than to build your own from scratch. Building a product is hard and painful. The worst part is that even a good engineer needs expertise in the specific niche they want to disrupt. If you are building a solution for lenders, you need to fully understand how their business runs.

What are the challenges that keep people from commercializing and making money from their products?

Your Product is not Good Enough

Not everyone can create a product, even if they are good engineers. It is as simple as reading and writing. While many people can become very knowledgeable in a language, and master all the words possible, not everyone can write a thriller story or novel. And once you have written one, marketing is the other challenge that you face. Many great books have failed to fly off the shelf because marketing was not properly done. In a different scenario, poorly written books that have little or nothing to tell can end up becoming bestsellers. Many people have invested in creating products that simply don’t work. To be fair, many products fail even great ones. However, it takes determination, skill, great talent, and sometimes chance to get a good product.

If you have a product that you want to launch, you may consider getting experienced people who can tell you whether what you are doing is nonsense or the next big idea. Mentorship is important, and people with expertise are able to identify what can work, what may work, and what will definitely never work.

Geographical Barriers

In 2012, when I was required to do a final year project, I was looking for the simplest solution that could give me an easy time and a good grade. I came up with a noise meter that could report via SMS, as well as issue alerts on excess noise depending on the set levels. After school, I tried to find a practical application for it but there was simply no market, and thus no motivation to commercialize the project. Three years later, a company was founded in the US to offer the same product. Airbnb hosts love the idea.

The problem was that the geographical location I was in did not have a market for the product. Somewhere in a different country, it would have made sense. When Google launched a Personal Safety app that detects car crashes and calls 911, I saw some people in West Africa who already had done that years earlier, but they never made news, and possibly sales.

Marketing Skills

When a friend actively sold software, he used to marvel at the great opportunity that existed in the market. He had taken time to study the market and the competition, going into detail to understand what it would take to sell. There were many competitors with inferior products to theirs, and he knew that it would be easy. It did not take long for him to realize that some of their competitors were outdoing them in sales, despite the fact that he had a superior product. Today, he still keeps up with the industry and he knows better; in some cases, the sale comes first, and the product comes second.

Marketing is key, and even if you had the cure for cancer but you cannot convince the world to use it, you are as good as without a product. Unfortunately, many people who come up with products have poor marketing skills. A partner with such skills can help.

Lack of Funds

It requires money to make money. You need to have a business idea that can bootstrap, or else you have to turn to angel investors and venture capitalists. Bootstrapping requires a product that will sell easily with minimal input so as to generate the resources that will fund further development. This is hard, and most people would require an external investment in order to push their products out there. Unfortunately, VCs and angel investors are not that easy to come by, and this is where one needs networks that can help build credibility. Most innovators find themselves limited when they start looking for funds. 

It is not just the business funds that may hinder the growth of a product. One other factor to do with money is the background of the would-be entrepreneur. People who have a social safety net such as wealthy parents are able to venture into entrepreneurship more easily because there is always a fallback plan. This helps them to build a form of risk-averseness that encourages entrepreneurship, knowing that they do not risk starving to death.


The world is full of so many people who have great products but cannot make money out of them. It could be due to a lack of entrepreneurial skills, a lack of money to monetize their innovation or simply environmental factors such as geographical location. The best we can do for them is to provide an environment where they can try out their ideas, such as incubation hubs, and also help them to get the right partners who can help jumpstart their ventures.


NopeaRide is Making Clean Mobility a Reality in Kenya

Posted on 3 min read

One of the major obstacles to making environmentally conscious decisions is the immediate cost that is involved in many cases. It costs one convenience when you have to choose sort out their garbage and dispose it in the right way. It is inconvenient when for people when a country bans single use plastic bags, like Kenya did in 2017.

This is the case for electric vehicles in Kenya, where adoption has majorly been by enthusiasts and people who want to make a statement. This is because the supporting infrastructure is still in its nascent stage, and you will have some trouble charging your car somewhere between Nairobi and Mombasa.

However, an unlikely disruption is happening. NopeaRide is a ride hailing company that is unique and a first mover, because it runs 100% electric cars in Nairobi. That in itself is something good, but there is more to it.

Price Sensitive Market

Many Kenyans are very price sensitive, and the choice of a taxi service is often informed by the fare that they will be charged. This is where NopeaRide gains an unlikely competitive advantage.

NopeaRide charges lower prices than other ride hailing service, allowing one to save money and enjoy a clean, green ride. If in doubt, just check the price estimates from point A to B and compare it with the prices on NopeaRide app, using similar categories of vehicles with the same safety rating.

One would expect that an electric taxi charges you more, but it is actually the opposite. NopeaRide has the price advantage.

Better Terms for Drivers

Electric vehicles have another advantage that drivers and owners can enjoy. They are easier to maintain because they have fewer moving parts compared to internal combustion engines. An example of this is in use of electric motorcycles for bodaboda, where it was found that riders reduced their maintenance cost by 90%.

But the main catch for electric taxis on NopeaRide is that drivers earn more, and spend virtually nothing on fuel. Drivers earn 50% more than those in other ride hailing platforms. For fuel, drivers can recharge their cars for free at the various recharge stations within the city.

Nairobi is Ideal for Electric Taxis

Why would an electric ride hailing choose to launch in Nairobi and not any other place? One of the reasons for this is the ideal conditions offered by the city.

EkoRent founder Juha Suojanen says that Nairobi has some large population of 4.3 million living in area that is roughly 30 km by 30 km. This puts any point within the range of all electric vehicles, and makes it easy to create an effective charging network. Besides, and ordinary driver in Nairobi also drives for only short distances in a day, hence electric cars can be ideal.

Kenya is already a global leader in using cleaner energy, with 93 of electricity being generated from renewable sources. Perhaps, Nairobi should take the challenge and go all green. NopeaRide has already set the foundation for that.

Next time you are going out, trying an electric taxi.


The Race for Electric Boda Bodas in Kenya

Posted on 4 min read

Twenty years ago, motorcycles were a preserve for the rich in Kenya. In rural areas, a few teachers owned them, and agricultural extension officers used to ride them as they went for farm visits. They were not common, and were never a public means of transport.

This all changed when President Mwai Kibaki’s government implemented some policies that lowered the buying price of motorcycles, enabling many people to acquire them. Many youths jumped into the opportunity and motorcycles, popularly known as Boda Bodas in East Africa, went mainstream in Kenya.

Since then, motorcycles are a preferred means of transport in all parts of Kenya. As of 2020, there were more than 1.4 million boda boda riders in Kenya, doing a total of 22 million rides per day. The total revenue from the industry is KShs 980 million per day.

The Energy Part

One of the associated industries that has gained from the growth of boda boda is the energy sector, where it is estimated that the riders spend about 25% of their income on fuel. This would translate to about KShs 250 million spent every day on fuel.

It is this lucrative industry that is attracting different players with electric bikes. Traditionally, motorcycles run on petroleum fuel which has a lot of negative effects on the environment. Besides, the cost of repair and maintenance is high due to the many parts involved using Internal Combustion Engines.

With electric bikes, boda boda operators can save on fuel costs, spare parts, serving, and reduce their Carbon dioxide emissions.

Startups in the Electric Motorcyle Business in Kenya

Here are few startups that are seeking a piece of cake in lucrative electric boda boda sector.


Ampersand is an electric motorbike company which has been operating in Rwanda, but now expanding to other countries in East Africa. In April 2021, Ampersand secured a funding of 3.5 million USD from the Ecosystem Integrity Fund (EIF) to fund its expansion. Already, the company has advertised for various positions as it plans its entry into the Kenyan market.

Ampersand assembles its electric motorcycles and finances riders to acquire the bikers, as well as providing swap stations where riders come to swap batteries once charge is depleted.


Opibus is a Kenyan based electric mobility start-up that has successfully converted Internal Combustion Engine vehicles to electric. One of the products that they are building is an electric motorcycle that is locally designed in Kenya.

Opibus’ electric motorcycle comes with a 2.9kWh battery with an extra slot for an optional second battery, and is available for preorder in Kenya, with delivery dates starting late 2021.


Ecobodaa is a Kenyan startup that is slowly disrupting the boda boda industry in Kenya. The startup providers riders with electric motorbikes that are designed and assembled in Kenya, and supports them to succeed as boda boda riders. With its unique ride-to-own financing model, riders get to own their bikes after sometime.

Ecobodaa launched a successful pilot program in 2020 before beginning their expansion. The startup has secured funding from Persistent Energy Capital in April 2021 to help accelerate its growth in Kenya.

Mazi mobility

Mazi mobility is another Kenyan startup that is assembling electric motorbikes in Kenya. Founded in 2020, Mazi mobility seeks to enable boda boda riders in Kenya to acquire electric bikes and provides battery swapping stations where riders will quickly swap their batteries quickly and efficiently.

Kiri EV

Founded in 2020, Kiri EV manufactures electric motorcycles in Kenya. It also provides charging stations, as well as battery swap stations. The firm has been in pilot phase but is now taking preorders from the public.

Fika mobility

Fika mobility wants Kenyans to transition to electric motorcycles by offering them affordable electric motorcycles and providing battery swap station for easy charging.

ARC Ride

Arc Ride is a British startup that offering electric motorcycles in East Africa. The startup is focusing on assembling electric motorbikes, establishing solar charging networks, assisting in ownership and offering fleet management services.


STIMA enables boda boda riders to acquire electric motorcycles and offers a battery swapping network to enable faster and easy battery swap.


In May 2021, Uber announced the launch of electric boda bodas in Kenya on its platform. This would allow riders offering the Uberboda, Uber connect and Uber Eats to run the service on electric motorcycles.


Bolt followed Uber’s move and unveiled electric motorcycles in Kenya in June 2021. The electric motorbikes are in use by Bolt Food Carriers who do food delivery and will be expanded into the ride hailing business.


There are some startups that are solely dedicated to providing charging infrastructure for electric vehicles. These include Chaji Energy and E-safiri.

UNEP’s Electric Mobility Programme has also added a voice in the race to electrify the boda boda industry in Kenya. Earlier in 2021, UNEP donated 99 electric bikes that are in use in Kenya in Karura Forest, Kenya Power and Lighting company, Power Hive and Kisumu County.


Scaling up lessons from M-PESA

Posted on 3 min read

Building a good product is hard. Getting people to use the good product you have built is even harder. I have seen the careers of many developers come to an end because they thought that having the perfect product would mean mass adoption, only to realize that no one was interested in their apps. Why does this happen? Because it takes more than a good product to sell. It takes skills and effort to market, it takes marketing research, it takes money to advertise, and sometimes, it takes chance.

M-PESA was launched in Kenya at just the right time. First, it was a perfect product for a market where sending money to someone in the next town was as unreliable and as slow as sending a letter. M-PESA promised to change all that, and they did exactly that. But how did it get mass adoption in Kenya? Safaricom had made the onboarding process very easy, where one needed just a National Identification card. They also made it a big show, where everybody got to hear about it and curiosity was rife. With a good budget and advertising team, it was possible to enroll some people. However, past that Safaricom needed two things:

  • A critical mass of people to register for M-PESA
  • M-PESA agents being available everywhere

Safaricom had two genius techniques to achieve these two.

Getting the masses to register for M-PESA

Safaricom allowed one to send money to both the registered and unregistered M-PESA users. It was cheap to send money to registered M-PESA users, but expensive to send to money to people to people who had not registered for M-PESA. The implication of this was that before you sent money to any person, you had to confirm if they were registered or not. If not, you would ask them to find someone nearby who was already registered and send to them instead. This idea of receiving money through a proxy was not appealing, and this would be enough to make someone to register.

With that, Safaricom turned M-PESA users to M-PESA evangelists.

Getting agents in every corner

The success of M-PESA was pegged on availability of agents in all places. This is currently the reason why other mobile money platforms have failed to gain traction in Kenya, because you cannot find their agents. With M-PESA, you probably need to turn around to find an agent, that is if there is no M-PESA agent right in front of you.

How did M-PESA manage to get so many agents? The first thing was the revenue sharing model. When one sends money through M-PESA, they are charged some transaction fee. This fee is shared between Safaricom and the mobile money agents involved. For this reason, people realized that they could actually make money by becoming M-PESA agents, and soon every shop and stall added M-PESA agency services on the sideline.
Safaricom followed up by providing the necessary branding merchandise. An M-PESA agency outlet looked cool. With that, they now needed to vet who wanted to be an agent, as too many people were trying to jump into the train.


It was not that easy, and Vodafone cannot replicate the same fete elsewhere. The most sure way to know if your start-up or business will scale is simply to try it out.