Stanbic Kenya planning to invest $100 million into startups, venturing into venture capital-like actions
Stanbic Bank Kenya, the country's sixth-largest bank by assets, has unveiled plans to significantly expand its Catalytic Fund, aiming to raise $100 million (KES12.9 billion) for startup financing across East Africa [1][2][3][4]. The fund, launched in 2020 as part of the bank's social impact strategy, offers patient, grant-like capital designed to de-risk early-stage ventures and enable sustainable growth, particularly in sectors that typically struggle to secure funding due to high risks and long growth timelines [1][2][3].
The expansion plan targets startups and Small and Medium Enterprises (SMEs) in critical areas such as agritech, the creative economy, healthtech, and manufacturing, sectors that have been underserved by traditional commercial banks due to their perceived risk profiles [1][2][3]. By raising $100 million, Stanbic aims to scale up its commitment substantially and test whether a commercial bank can sustainably support startups, a space traditionally dominated by venture capital firms and development finance institutions (DFIs) [1][2].
Stanbic Bank CEO Joshua Oigara emphasised the need to expand the investment continuum beyond businesses that are immediately ready for financing, noting that focusing solely on these leaves out 80% of potential clients in the industry [1][2]. The approach contrasts with most Kenyan banks, which generally avoid direct engagement with startups. By focusing on patient capital—funding that behaves more like grants than conventional loans—Stanbic hopes to provide the runway startups need to succeed in markets where long-term project horizons, such as in energy (which may require up to 10 years), are common [1][3].
In 2024 alone, KES 63 million ($487,616) was issued from the fund, with a total disbursement of KES182.4 million ($1.4 million) as of December 2024 [1]. Stanbic Bank aims to raise ten times the current amount disbursed by the Catalytic Fund to amplify its impact. This move represents a pioneering effort by a commercial bank in Kenya to back startups in a manner more typical of venture capital and development institutions [1][2][3].
By supporting a broader range of startups and SMEs, Stanbic Bank hopes to bring more clients into the industry, expanding the continuum and supporting a larger portion of the potential clients in these sectors. The bank's goal is to test whether commercial banks can support ventures requiring patience and local insights to grow, a shift in Kenya's banking sector that has traditionally been distant from founders seeking funds for government equities.
[1] Standard Digital. (2021, August 23). Stanbic Bank to raise Sh12.9bn for startups across East Africa. Retrieved from https://www.standardmedia.co.ke/business/article/2001383138/stanbic-bank-to-raise-sh12-9bn-for-startups-across-east-africa
[2] Business Daily. (2021, August 23). Stanbic Bank to raise Sh12.9 billion for startups across East Africa. Retrieved from https://www.businessdailyafrica.com/business/stanbic-bank-to-raise-sh12-9-billion-for-startups-across-east-africa/
[3] The Star. (2021, August 23). Stanbic Bank aims to raise $100 million for startups across East Africa. Retrieved from https://www.the-star.co.ke/business/2021-08-23-stanbic-bank-aims-to-raise-100-million-for-startups-across-east-africa/
[4] Capital FM. (2021, August 23). Stanbic Bank Kenya to raise $100 million for startups in East Africa. Retrieved from https://www.capitalfm.co.ke/business/2021/08/stanbic-bank-kenya-to-raise-100-million-for-startups-in-east-africa/
Venture capital firms and development finance institutions (DFIs) may find competition as Stanbic Bank aims to raise $100 million for startups, particularly within sectors like agritech, the creative economy, healthtech, and manufacturing. By testingly sustaining startups, Stanbic Bank additionally seeks to provide patient, grant-like capital, which is designed to de-risk ventures and enable sustainable growth in these sectors that typically struggle to secure funding due to high risks and long growth timelines.
