Stanbic Bank Kenya, the sixth largest lender in the country by assets, is seeking to raise $100 million (KES12.9 billion) to finance startups and small businesses across East Africa.

The initiative marks an uncommon move by a commercial bank into a sector traditionally dominated by venture capital firms and development finance institutions (DFIs).

According to TechCabal, the funds will be channelled through Stanbic’s Catalytic Fund, which targets startups and SMEs in sectors such as agritech, healthtech, manufacturing and the creative economy, industries that often face difficulties accessing capital.

The bank’s approach reflects a potential shift in Kenya’s banking sector, which has historically stayed removed from early stage ventures requiring long term capital and local market understanding.

By raising funds for onward lending, Stanbic aims to test the commercial viability of bank led startup support.

“We are in the market for US$100 million (KES12.9 billion),”

said Stanbic Bank CEO Joshua Oigara.

“We have learnt that if you keep just focusing on the businesses that are ready now, you are leaving 80 percent of the clients in the industry. We have to continue expanding the continuum by bringing such in.”

The Catalytic Fund was launched in 2020 as part of Stanbic’s social impact framework.

Rather than issuing conventional loans, the fund provides patient capital, often compared to grants, designed to help early stage businesses grow while mitigating financial risk.

As of December 2024, the bank had disbursed KES182.4 million (US$1.4 million) through the fund, with KES63 million (US$487,616) distributed in 2024 alone, based on its public disclosures.

Although the sums remain relatively small, the fund focuses on sectors that typically face higher borrowing costs or lack access to credit entirely.

“Energy projects tend to have the longest lead time from what we have seen, even ten years,”

Oigara added.

“We have aligned with the biggest areas of the economy, like agriculture, because the model is similar, but energy projects tend to have the longest lead time.”

Stanbic’s move diverges from the prevailing trend among commercial banks in the region, which tend to remain cautious and are largely absent from startup financing.

Founders in Kenya and the wider region often rely on venture capital, DFI support or philanthropic funding, a model that has faced increasing scrutiny in recent years.

Featured image credit: Edited by Fintech News Africa, based on image by Amani Nation via Unsplash