President Trump’s executive order to shut down USAID has halted essential aid to vulnerable populations worldwide and cut off a significant stream of non-dilutive funding to African startups. Over the past decade, USAID’s Development Innovation Ventures (DIV) invested more than $100 million in Kenyan startups, supporting innovations in healthcare, agriculture, and clean energy. With the shutdown, that opportunity is now lost for many promising ventures.
The DIV program has been a vital source of funding for over 30 Kenyan startups, providing grants ranging from $500,000 to $6 million to help scale operations and prove the viability of their ideas. For example, 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 vital for founders who face challenges securing venture capital. This is particularly concerning for those in the Kenyan startup ecosystem who have long relied on foreign development funding.
Kenya, Africa’s ‘Silicon Savannah,’ has emerged as one of the continent’s leading startup hubs. In 2024, the country secured around $638 million in venture capital funding.
However, assistance from development agencies like USAID has been integral to the growth of many Kenyan startups. This support has largely gone untracked, but its loss will be felt deeply across the ecosystem.
BasiGo, an electric bus company, secured a $1.5 million USAID grant to expand to Rwanda, and Maisha Meds received $5.25 million to develop a platform for distributing medical supplies. Similarly, SolarGen Technologies 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 improve its diagnostic platform, while other companies like M-KOPA and Twiga Foods have benefited from DFC debt financing.
The USAID shutdown comes as 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 seen increasing interest from impact investors. However, the Trump administration’s stance on climate change and environmental conservation may undermine these gains, threatening the growth of climate tech startups.
