Stanbic Bank has unveiled plans to mobilise Sh12.9 billion over the next year to scale up its financing of startups across various sectors, saying the current structure of traditional banking has left many of them underserved.

The lender aims to channel the funds through its Catalytic Fund, a facility it uses to offer patient capital to early-stage and growing businesses in sectors such as agribusiness, manufacturing, creative arts, education, and healthcare.

The bank is targeting companies with fast-growing revenues or those introducing new products and services with strong growth potential.

“We invest the Catalytic Fund in such businesses which are new startups or scalers. Kenya today has got just about five million scalers and our estimates show that out of those, less than a million have access to financing,” said Stanbic Bank Chief Executive Joshua Oigara during the launch of the bank’s third sustainability report in Nairobi.

Oigara said that Stanbic’s goal is to go beyond funding only businesses that are already investment-ready, noting that most startups are left behind by mainstream banking systems.

“The way we have seen financing in that segment of the economy, the ambition is quite significant. We are in the market for $100 million (Sh12.9 billion). We have learnt that if you keep just focusing on the businesses that are ready now, you are leaving 80.0 percent of the clients in the industry. We have to continue expanding the continuum by bringing such in,” he said.

Since the Catalytic Fund was launched in 2020, Stanbic has disbursed Sh182.4 million, including Sh63 million in grants in the year ending December 2024.

The bank is now deepening its grant-making capabilities through a partnership with the Gates Foundation, which aims to support startups and scalers in the medium term.

“Initially, we provide them with a grant and then over time we give them access to market capabilities and bring in partners like Microsoft and GIZ as well as the work we are now doing with the Gates Foundation to be able to build strong capabilities. What excites me is that the repayment of this funding has been the highest at 80.0 percent,” Oigara said.

While the energy sector is also viewed as a promising area for the Catalytic Fund, Stanbic said its involvement remains limited due to the nature of financing it demands.

“Energy projects tend to have the longest lead time from what we have seen, even 10 years. If you do short-term financing for energy projects, they don’t always come along...we've 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,” Oigara explained.