Commercial lender aims to fill funding gap in agritech, creative economy, healthtech, and manufacturing
Stanbic Bank Kenya is seeking to raise $100 million (KES 12.9 billion) to support startups and small and medium-sized enterprises (SMEs) across East Africa, marking an unusual step for a commercial bank in a sector traditionally dominated by venture capital (VC) and development finance institutions (DFIs).
The bank plans to deploy the funds through its Catalytic Fund, backing early-stage businesses in sectors such as agritech, the creative economy, healthtech, and manufacturing—areas that often struggle to secure affordable credit.
A Shift in Banking Strategy
The move signals a potential shift in Kenya’s banking landscape, where commercial lenders have typically shied away from financing startups viewed as high-risk and requiring patient capital.
By raising capital specifically for onward lending to early-stage ventures, Stanbic aims to test whether commercial banks can sustainably serve founders who need flexible, locally informed financing to grow.
“We are in the market for $100 million (KES 12.9 billion),” Stanbic Bank CEO Joshua Oigara told TechCabal. “We have learnt that if you keep just focusing on the businesses that are ready now, you are leaving 80% of the clients in the industry. We have to continue expanding the continuum by bringing such in.”
The Catalytic Fund: De-risking Early-Stage Ventures
Stanbic launched its Catalytic Fund in 2020 as part of its social impact strategy. Unlike conventional loans, the fund offers patient, grant-like capital designed to help startups de-risk their operations and scale sustainably.
This model contrasts sharply with typical bank lending, which prioritizes short-term returns and low-risk borrowers. The fund is meant to address a well-known gap in African markets, where early-stage companies often face scarce, expensive, or inflexible financing options.
As of December 2024, Stanbic had disbursed KES 182.4 million ($1.4 million) through the fund, with KES 63 million ($487,616) issued in 2024 alone.
While those sums remain small in absolute terms, they reflect an experimental approach to supporting sectors that banks have largely ignored. Now, Stanbic hopes to raise ten times that amount to significantly expand its reach.
Focus Sectors and Long-Term Perspective
Stanbic says the new round will prioritize high-potential but underfinanced sectors. In particular, the bank is betting on the creative economy, agritech, healthtech, and light manufacturing.
Oigara also pointed out that some projects—especially in energy—can require even longer timeframes to become viable, underscoring the need for patient financing models that match local realities.
“Energy projects tend to have the longest lead time from what we have seen, even 10 years,” he noted. “We’ve aligned with the biggest areas of the economy, like agriculture, because the model is similar.”
Challenging the Status Quo in Startup Financing
Stanbic’s strategy stands in stark contrast to Kenya’s traditional commercial banking approach, which has generally avoided direct startup financing because of high perceived risk.
Local founders have typically relied on VC firms, DFIs, and philanthropic capital from organizations like the Gates Foundation—a model that has come under strain as global fundraising conditions tighten.
By stepping into this gap, Stanbic Bank is positioning itself as a potential pioneer among African lenders willing to share risk and deepen financial inclusion for the region’s entrepreneurial ecosystem.