17th-Dec-2025 • Reddington Onyango • Startups
Small and Medium Enterprises (SMEs) form the backbone of Kenya's economy, contributing significantly to GDP and employment. However, to stay competitive and grow in today's rapidly evolving business landscape, many SMEs are turning to startups for innovation and growth opportunities.
Startups, by definition, are young companies that seek to solve problems or capitalize on opportunities through novel products, services, or business models. They are often characterized by their agility, adaptability, and risk-taking spirit, qualities which SMEs can greatly benefit from.
One striking example is M-KOPA, a Kenyan startup that provides affordable solar power to off-grid households using a pay-as-you-go model. By partnering with SMEs involved in the renewable energy sector, they have expanded their reach and increased accessibility of clean energy solutions across Kenya.
Data insights from the World Bank suggest that Kenyan startups are among the most active in Africa, with over 5,000 new companies registered every month. This vibrant startup ecosystem presents immense opportunities for SMEs to collaborate, innovate, and grow.
Collaborations between startups and SMEs can take various forms, such as strategic partnerships, joint ventures, or acquisitions. These collaborations allow SMEs to tap into the innovative capabilities of startups while providing startups with access to established networks, resources, and expertise.
Technology plays a crucial role in driving innovation within startups. By adopting emerging technologies, SMEs can streamline operations, improve customer service, and gain competitive advantages.
One such technology is Lipabiz Technologies Ltd's business management platform, which offers solutions for inventory management, sales tracking, and financial reporting. By integrating these tools into their operations, SMEs can increase efficiency, reduce costs, and make data-driven decisions.
To foster a conducive environment for startups, SMEs are encouraged to provide mentorship, invest in promising startups, and advocate for policies that support entrepreneurship. By supporting the growth of startups, SMEs contribute to the overall development of Kenya's economy and set the stage for future success.