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CorporateUpdated 1 min read

Startup funding in Kenya: SAFEs, convertible notes, equity

How startups typically raise their first rounds and the documents investors expect to see.

By Wakili Link Editorial

Kenyan startups raise early money in three main ways: priced equity, convertible notes and SAFE-style agreements.

Priced equity

Investors buy shares at an agreed valuation. Documents: a term sheet, subscription agreement, shareholders’ agreement and amended articles. Most transparent, but valuation negotiation takes time.

Convertible notes

A loan that converts into shares at a later priced round, usually at a discount and subject to a valuation cap. It accrues interest and has a maturity date.

SAFE-style agreements

A right to future equity, with no interest or maturity. Simple and fast, but founders must model dilution carefully.

Kenyan-specific points

  • Share allotments must be authorised and filed with the Registrar.
  • Foreign investors may need to consider exchange control reporting with their bank and sector-specific ownership limits.
  • Stamp duty may apply to share transfers.
  • Data room: have incorporation documents, registers, material contracts, IP assignments and employment contracts ready.

Before you raise

Clean up the cap table, make sure all founders and developers have assigned IP to the company, and resolve any outstanding compliance filings.

This article is general information, not legal advice on your situation.

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    Startup funding in Kenya: SAFEs, convertible notes, equity