Kigali - Africa’s Rising Entrepreneurial Powerhouse

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When we think of African entrepreneurship hubs, Nairobi often comes to mind first. The city has been instrumental in fostering startup culture and venture capital in Africa, evidenced by the impressive number of startups founded there and the substantial capital flowing into the country each year.

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However, in the past five years, other African nations have been striving to replicate Kenya’s success. Among these is Rwanda, which is on track to becoming the continent's next major startup hub. There are many reasons why this small, land-locked country is becoming increasingly attractive for entrepreneurs as well as investors. Rwanda’s economy has demonstrated an impressive yearly growth of 7.5% since 2007 and ranks as the second-highest African country on the World Bank’s Ease of Doing Business Report¹ - a new company can be registered in just six hours. The Rwanda Innovation Fund (RIF)² launched in 2018 by the Rwandan government to bridge the funding gap for tech-enabled companies has already disbursed nearly $10 million, and the eagerly awaited Startup Act³ is expected to further catalyze startup activities. Additionally, Rwanda has emerged as the second most popular destination for international business conferences in Africa.

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During my time at Madiro’s Kigali office this summer, the dynamic startup activity in Rwanda was hard to miss. Ampersand e-motorcycles wind their way through Kigali traffic, Airbnb apartments feature Jibu water tanks, handicraft shops offer socially conscious products, and if you're lucky, you might even spot a ZipLine drone delivering urgent medical supplies to a remote hospital. At the heart of Rwanda’s entrepreneurial scene is the Norrsken Kigali House, a co-working space established by the Norrsken Foundation in 2021, right in the city center. With its innovative design incorporating sustainable materials and native plants, Norrsken has not only built an exceptional co-working space, but also a hub where African founders, investors, and innovators can gather to exchange ideas. Norrsken also hosts weekly events to promote engagement among its community members, such as at Founders Friday where startup founders pitch their companies to potential investors. Working in Kigali and the Norrsken office for these past three months has brought this entrepreneurial vibrancy to life, where the blend of innovation, collaboration, and social impact is not just an idea, but a palpable reality driving Rwanda’s growth as a new startup epicenter in Africa.

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Kigali’s emergence as Africa’s next startup hub is a significant development. As Acumen recently highlighted⁴, many African countries remain significantly underfunded, with the majority of East Africa's startup funding going to Kenya. 2024, Kenya received a staggering 94% of all venture funding in East Africa. But Rwanda is not alone in its rise; countries like Nigeria, Egypt, and South Africa also boast vibrant startup ecosystems and are closing the gap to Kenya in terms of funding received.

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Bridging the Funding Gap: The Crucial Role of Philanthropic Impact Investing in Africa

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As new startup hubs emerge across Africa, access to appropriate funding becomes increasingly critical. According to Briter Bridges’⁵ latest investment report, Africa’s deal volume has dropped to $4.1 billion in 2023 from an all-time high of $5.1 billion in 2022 - a 21% decrease. While economic turbulence and fears of a global recession have undoubtedly contributed to this decline, another key factor is the mismatch between available funding and the needs of African startups. Much of the funding for African startups comes from Venture Capital (VC) firms, which demand rapid growth to deliver returns to their Limited Partners (LPs). Although Africa has produced its share of unicorn success stories, the growth expectations of VC firms do not align with the trajectories of many African startups. Premature scaling is one of the most common reasons why 90% of startups fail⁶. The African startup ecosystem needs not just more capital, but better-structured capital that fosters local investment and sustainable growth.

At Madiro, we are dedicated to enhancing access to patient capital. Our unique model of raising donor funds for equity investments in promising healthcare startups enables us to forge long-term partnerships with our investees. While we set clear expectations for scaling and aim for returns from future exits to reinvest in new ventures, we also offer patient capital that supports sustainable, long-term growth. By 2026, we aim to invest an additional $20m into 22 promising healthcare startups across the African continent.

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