Between Two Economies, Across Five Continents: Lessons for Africa’s Founders on Building to Last

By Liz Kariuki, Co-Founder of Impact Hub Nairobi

(small.news) — I live between two economies. My mornings begin on the high street of a small UK city, past the independent cafés, repair shops, and family businesses that keep a local economy alive.

By mid-morning, my mind and my phone belong to Nairobi: founders seeking introductions, discussing proposals for solutions that will accelerate impact, partners finalizing programs, and the team at Impact Hub Nairobi (IHN) curating and quality-checking projects. IHN is a regional social innovation hub within a global network of more than 120 Impact Hubs across five continents, a network that has shown me far more economies than the ones I have lived and worked in.

For most of my career I believed the difference between these two worlds was the size of the cheque. This year I realized it is the shape of the cheque.

Same Ambition, Different Money

Let me start with the North, where I now live and work. Global venture funding reached $425 billion in 2025, the third-largest year on record. The United States took 64 per cent of it, and roughly half went to artificial intelligence.

What strikes me more is how northern governments back their own small firms as national strategy. The UK’s Seed Enterprise Investment Scheme lets investors claim half of what they put into a young company back as income tax relief. In the United States, federal agencies awarded $3.3 billion in a single year to small firms through the Small Business Innovation Research program, without taking equity. The message is simple: we believe you will grow, and we want you to grow here. When I compare notes with fellow Impact Hub leaders in Europe and North America, that confidence is the first difference I notice.

Now look south, where I have spent most of my career. African startups raised $3.2 billion in 2025, a 40 per cent rebound but still less than one cent of every venture dollar invested worldwide. The earliest stage is even leaner: pre-seed rounds raised just $46.5 million, about 1.5 per cent of African venture investment, against four to six per cent in the United States.

What fills the gap is mostly not investment but programs: cohorts, challenge funds and twelve-month grants with log frames and closing reports. After more than a decade in this work, I have reached an uncomfortable truth. In the North, founders are funded as investments. In the South, they are too often funded as projects. An investment is designed to compound. A project is designed to close.

I say this from inside the system. Almost every funder I have worked with, and most live opportunities in our ecosystem, come from the North: private foundations, development agencies, innovation finance institutions and research consortia. I am grateful for each of them and for the support they relentlessly give to accelerate sustainable impact. But I would be failing the founders we serve if I pretended this model was built to last.

The Year the Tide Went Out

This brings me to another challenge: how we evaluate the work.

In April, the OECD confirmed what many of us already felt: official development assistance fell by 23.1 per cent in 2025, the largest annual drop on record, with a further 5.8 per cent decline projected for 2026. The UK is cutting aid from 0.5 to 0.3 per cent of national income by 2027, its lowest share since 1999.

The venture data I follow tells the same story. Kenya led Africa in 2025, raising $984 million, nearly a third of the continent’s total. But 60 per cent was debt, much of it flowing to clean energy companies with physical assets and predictable revenue, such as d.light and Sun King.

Then came 2026. In the first half, only 190 African ventures raised $100,000 or more, the fewest since tracking began in 2021, and Kenya had its weakest first half since early 2021. The money did not vanish. It concentrated into bigger cheques for fewer companies and a record 63 acquisitions.

I am also watching new patrons arrive, from a $250 million Saudi fund for African startups to Japanese corporates and a growing base of local investors. They are welcome, but selective. Gulf investors rarely lead rounds, and for founders outside North Africa or in sectors such as Agritech, that wallet remains largely closed.

What Kenya’s Real Economy is Telling Us

The economy I have largely worked with in Nairobi is not the one in the funding reports. Kenya created 822,100 jobs in 2025, and 87 per cent were informal, a share that has held for five years. Nine in ten new jobs come from market traders, Boda Boda riders, dairy cooperatives and roadside workshops.

The statistic that matters most to me is productivity. McKinsey Global Institute found that Kenyan small businesses are just six per cent as productive as large companies, against 29 per cent on average across the emerging economies it studied. That gap is the market. I am convinced the next decade will be won not by the most elegant pitch deck, but by startups that make the informal economy more productive: cutting a cooperative’s milk spoilage, helping a matatu operator run a fleet, or getting a vendor paid in hours rather than weeks.

Money is also getting cheaper. The Central Bank of Kenya has held its rate at 8.75 per cent, average lending rates have fallen from 17.2 per cent in November 2024 to 14.3 per cent in July 2026, and private sector lending is growing at its fastest pace since early 2024. Local capital is easing just as foreign aid shrinks, and I want our founders ready to use that window.

Who Pays You on a Tuesday?

Our AI4Startups hackathon brought more than 200 AI startups together to build climate-risk models, parametric insurance, and market intelligence for smallholder farmers. That talent would hold its own anywhere in the world.

The question I keep asking teams is not how big their market is, but who pays them on a Tuesday. A smallholder farmer cannot buy a climate-risk model. An insurer, agro-dealer, cooperative or county government might. Teams with a clear answer have a business. Teams without one have a project, however brilliant.

We see the same pattern in our Inclusive Climate Entrepreneurship programme and SME finance workshops. Many founders describe their impact beautifully but struggle to produce the monthly accounts a lender needs. That is why IHN now offers fractional CFO and fundraising support, and why we are growing our own earned income to depend less on programme cycles. We are taking our own medicine.

Seven Moves for Founders in the New Money

This is the advice I now give founders, in Nairobi and beyond.

Treat every grant as research money, not runway. If it ended tomorrow, which of your costs would survive? Use grants to buy proof, such as a pilot, a dataset, or a certification, that customers and investors value.
Name the customer who pays on a Tuesday. Who signs the cheque, how often, and why is buying from you cheaper than not? If the answer is your funder, you do not have a customer yet.
Keep books a lender could love. Debt is now the largest source of growth capital for Kenyan startups, and lenders read cash flow, not vision. Keep monthly accounts, a clean receivables ledger, and clear unit economics.
Match the money to the model. Asset-heavy businesses in solar, e-mobility or cold chains suit asset finance and debt. High-margin software suits equity. The wrong capital can hurt as much as none.
Borrow local while it is cheaper. Falling lending rates are an opportunity, but if you earn in shillings, think hard before borrowing in dollars.
Read an investor’s thesis before their term sheet. Gulf, Japanese, and local investors want different things. Secure a lead who understands your market, then bring in follow-on capital.
Use the network you belong to. The Impact Hub Network supported 15,554 impact enterprises in 2025, 54 per cent of them with women co-founders. Our Star Connect members carry a Global Passport to more than 120 hubs. Use it for market entry, corporate pilots, and partners in other time zones. The corporates in our network are potential customers, not just sponsors.

A Word to My Neighbors in the North

My ask of northern funders is simple: fund African founders the way you fund your own. That means patient early equity, like the AI4Startups program’s €10,000 micro-equity pool, shared between the winning startups; guarantees that unlock local bank lending; and procurement contracts that make our founders suppliers rather than beneficiaries. By industry estimates, the continent needs around $120 million a year in pre-seed capital. Against $425 billion in global venture funding, that is a rounding error.

On my walk back along that high street, none of the business owners I pass think of themselves as a project. Neither does any founder I know in Nairobi. The aid cliff will hurt, and some good organisations will not survive it. But it may free us to build companies designed to compound rather than close.

The North invests in its founders. It is time we, and our partners, did the same for ours.

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