Startups which have been in existence for a period of more than 3 years risk being locked out from registration as a startup and admission into incubation programmes if they do not meet the criteria in the recently passed Startup Bill.
- The criteria in the bill requires a startup to have its headquarters in Kenya, not distribute profits, and be wholly owned by one or more Kenyans.
- Startups will also have to demonstrate that at least 15 per cent of their expenses are expended on research.
- The Bill establishes a Startup Fund financed through government appropriations, grants, and donations.
“A registered startup will be required to achieve the growth goals related to the number of human resources, total assets and the annual turnover set by regulations, maintain accounts and submit financial statements to an agency and inform the agency of any changes in its structure, composition or object,” according to the Bill which now awaits Presidential assent to become a law.
Key Highlights
The Bill introduces key definitions, including “startup,” “accelerator,” “incubation program,” and “startup ecosystem players.” It designates the Cabinet Secretary responsible for micro, small, and medium enterprises to oversee implementation.
The Kenya National Innovation Agency and Kenya Industrial Estates have been mandated to supporting startups by developing a national incubation framework, fostering innovation, and creating linkages between universities and the business sector.
Members of the National Assembly okayed incentives and Protections introduced in the Bill in several clauses which outline fiscal and non-fiscal incentives for startups, incubators, and investors. These include tax reliefs, grants, subsidies, and access to government procurement opportunities.
The bill also mandates the Kenya Industrial Property Institute to expedite IP registration and protect innovations.
“This Bill will position Kenya as a global innovation hub, offering young innovators a pathway to turn ideas into viable businesses,” said Irene Mayaka.
The bill has also set out the process of de-registration which includes issuance of a compliance notice of which failure to comply with the notice result in de-registration.
If the bill is signed into law, companies formed as a result of merger, split, reconstruction of an existing company are not eligible for registration or admission into the incubation programme.
