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Grace Ashiru
President Trump’s executive order to shut down USAID has halted critical aid to vulnerable populations globally and severed a significant source of non-dilutive funding for African startups. Over the past decade, USAID’s Development Innovation Ventures (DIV) invested more than $100 million in Kenyan startups, fostering innovations in healthcare, agriculture, and clean energy. With the shutdown, many promising ventures have now lost the opportunity for vital support.
The DIV program has been an essential funding source for over 30 Kenyan startups, providing grants ranging from $500,000 to $6 million to help scale operations and demonstrate the viability of their ideas. For instance, Pula Advisors, a Kenyan insure-tech startup, received a $1.5 million USAID grant in 2023 to expand its insurance offering to smallholder farmers in Kenya and Zambia.
On January 24, the US State Department issued a directive to cut all aid, which could end grants that are crucial for founders who face difficulties securing venture capital. This is especially concerning for those in Kenya’s startup ecosystem, who have long relied on foreign development funding.
Kenya, often referred to as Africa’s “Silicon Savannah,” has become one of the continent’s leading startup hubs. In 2024, the country secured approximately $638 million in venture capital funding. However, support from development agencies like USAID has been essential for the growth of many Kenyan startups. Though this support has largely gone untracked, its loss will have a profound impact on the ecosystem.
For example, BasiGo, an electric bus company, secured a $1.5 million USAID grant to expand into Rwanda, while Maisha Meds received $5.25 million to develop a platform for distributing medical supplies. SolarGen Technologies also received a $2.5 million grant to develop solar-powered water purification systems.
As the ecosystem adjusts to the USAID funding cuts, another concern is the potential shutdown of the International Development Finance Corporation (DFC), which has also provided grants and loans to African startups. For instance, Ilara Health received a $1 million loan from DFC in January to enhance its diagnostic platform, and other companies like M-KOPA and Twiga Foods have benefited from DFC debt financing.
The USAID shutdown comes at a time when the African startup ecosystem is undergoing a shift. In 2024, venture capital funding in Africa moved away from the dominance of e-commerce and fintech to climate tech—a sector that has garnered increasing interest from impact investors. However, the Trump administration’s stance on climate change and environmental conservation may undermine these advances, potentially threatening the growth of climate tech startups.
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