Factors influencing the success of tech startups in Nairobi City County, Kenya

Abstract

The studies reviewed on success factors for tech startups necessitate further research to examine the knowledge gaps and conceptual, methodological, and contextual inconsistencies. A literature search revealed limited studies in Kenya on the factors influencing the success of tech startups. Therefore, this study examines the factors influencing the success of tech startups in Kenya's Nairobi City County. The study's specific objectives were to establish the influence of the regulatory environment, access to funding, technological infrastructure, and entrepreneurial ecosystem on the success of tech startups. The resource-based view (RBV) theory and social network theory grounded the study. This study used the positivism philosophy to achieve the study objectives. A descriptive research design has informed the study. The study used simple random sampling to select the tech startups for this research and purposive sampling to pick the respondents. Mixed methods have been used to collect data through questionnaires and key informants. The unit of observation includes the tech startups. Self-administered drop-and-pick questionnaires were used to collect data from 111 managers and owners of tech startups and 20 key informants. Descriptive statistics were used to analyze data quantitatively using percentages, means, and standard deviation. The results of this study showed the significant effects of regulatory environment, access to funding, technology infrastructure and entrepreneurial ecosystems on the success of tech startups. First, the results also showed that the regulatory environment had a significant positive effect on the success of tech startups, which were also supported by the findings from the key informant interviews. These results suggest that improving the regulatory environment can improve the success of tech startups. Secondly, the findings from this study also indicated that access to funding had a significant positive effect on the success of tech startups, which implies that the success of tech startups can be increased by enhancing access to funding. The findings from key informant interviews also demonstrated the substantial role played by access to funding in enhancing the success of tech startups. Thirdly, the findings show that the technological infrastructure had a significant positive effect on the success of tech startups. The implication of this result is that improving the technological infrastructure can help enhance the success of tech startups. Findings from interviews validated the findings from the quantitative survey. Lastly, the results of the current study indicated that entrepreneurial ecosystems have a significant positive effect on the success of startups, signifying that improving the entrepreneurial ecosystem can improve the success of tech startups. This research highlights key policy recommendations to improve the regulatory environment for tech startups in Kenya, demonstrating its positive impact on their success. To enhance this environment, it is crucial to simplify compliance processes by formulating unified regulations for startups, reducing compliance costs, and establishing a dedicated government agency to address startup-related issues. Additionally, the findings emphasize the need for increased government support and initiatives for tech startups, including enhanced support for incubators. Implementing these recommendations can significantly strengthen the regulatory environment and entrepreneurial ecosystem for tech startups in Kenya.