Safaricom has indicated that it is planning to set up two venture capital firms. This is in an effort to buy into promising tech start-ups as it seeks to fuel its growth into the future.
Towards this, the telco has asked its shareholders to approve the establishment of the two firms during its annual general meeting on July 28, 2023. This move will allow it to buy into seed-stage and growth-stage startups. This comes at a time when a funding drought has seen dozens of startups close shop in Kenya.
“(The board proposes that) the incorporation of a company limited by guarantee to invest in seed stage startups to support the development and growth of technology entrepreneurs and build reputation and trust within the tech community in Kenya be approved. The incorporation of a private limited company (or the repurposing of an existing subsidiary) to invest in growth-stage startups (scale-ups) and initiatives that enable achievement of Safaricom PLC’s strategic mission for a financial return (profit) be approved” the notice signed by company secretary Kathryne Maundu reads in part.
The incorporation of the two special-purpose companies will mark an operational shift from the already running ‘Spark Fund’ grant. Safaricom unveiled the fund in 2015 to boost the growth of seed-stage startups in the country. The fund, which has been run by an unincorporated trust named Zindua since inception. It has seen the telco pump at least $1.5 million (Sh211.2 million) without receiving back commensurate tangible value.
The telco intimated that the proposed company to take over the scheme will be a wholly owned subsidiary of Safaricom. This is expected to help strengthen administrative and governance processes. The other limited liability company pitched for incorporation will train sights in growth-stage tech startups for a financial return to the telco.
“We are proposing the setup of a limited liability company for investing in growth stage startups and initiatives that are strategically aligned with our mission for a financial return,” says the telco. The intention is that any gains from the portfolio of investments will be capitalised back to Safaricom PLC.”