President Trump’s executive order to terminate USAID has abruptly cut off essential aid to vulnerable populations worldwide and halted a significant stream of non-dilutive funding for African startups. Over the last decade, USAID’s Development Innovation Ventures (DIV) invested over $100 million in Kenyan startups, helping to drive innovation in critical sectors like healthcare, agriculture, and clean energy.
With the shutdown, many promising ventures are left scrambling for alternative funding sources. DIV grants, ranging from $500,000 to $6 million, have been a vital resource for startups looking to scale operations and validate innovative solutions.
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.
- BasiGo, an electric bus company, secured $1.5 million to expand operations to Rwanda.
- Maisha Meds received $5.25 million to build a platform for distributing medical supplies.
- SolarGen Technologies developed solar-powered water purification systems with a $2.5 million USAID grant.
A Blow to Kenya’s Startup Ecosystem
Kenya, known as Africa’s ‘Silicon Savannah,’ is one of the continent’s most vibrant startup hubs. In 2024, the country attracted $638 million in venture capital funding. However, the role of development funding from agencies like USAID has been instrumental in providing early-stage capital and de-risking businesses in key sectors.
The loss of this funding will create significant challenges for startups, especially those in healthcare, agriculture, and clean energy, where foreign development grants have been critical to growth. This is particularly concerning for founders who often face limited access to venture capital and rely on grants to test and scale their ideas.
The Threat to Climate Tech Startups
The funding cut is especially problematic for the climate tech sector, which has gained increasing traction from impact investors. However, the Trump administration’s stance on climate change and environmental conservation may undermine recent gains in the sector. This threatens to stifle growth in climate-focused startups at a time when Africa’s transition to clean energy is gaining momentum.
Potential Shutdown of DFC Could Compound Challenges
Adding to the concerns is the potential shutdown of the International Development Finance Corporation (DFC), another key source of funding for African startups. The DFC has provided grants, loans, and debt financing to several companies:
- Ilara Health received a $1 million loan in January 2025 to improve its diagnostic platform.
- M-KOPA and Twiga Foods have benefited from DFC debt financing.
Without support from USAID and DFC, startups may find it increasingly difficult to raise funds, slowing growth and leaving critical sectors without the innovative solutions they urgently need.
What’s Next for African Startups?
As the Kenyan startup ecosystem adjusts to the loss of USAID funding, it will need to seek alternative sources of capital and partnerships. While the private sector and venture capital firms may fill part of the gap, development agencies and impact investors have historically provided the crucial early support that many African startups require to validate their ideas and scale operations.
The shutdown of USAID may also encourage African governments and regional development banks to step in and support local innovation ecosystems, ensuring that startups remain resilient in the face of this unexpected challenge. However, the path forward will be difficult without the vital support that USAID and DFC have provided over the years