How a Nairobi Businessman Lost Sh6.3 Million to Kytabu’s Tonee Ndungu in a Botched Startup Deal
A Nairobi businessman has dragged one of Kenya’s celebrated tech entrepreneurs, Tonee Ndungu, to court over an alleged Sh6.3 million fraud, in what is shaping up to be one of the most high-profile startup scandals of the year.
How a Nairobi Businessman Lost Sh6.3 Million to Kytabu’s Tonee Ndungu in a Botched Startup Deal
A Nairobi businessman has dragged one of Kenya’s celebrated tech entrepreneurs, Tonee Ndungu, to court over an alleged Sh6.3 million fraud, in what is shaping up to be one of the most high-profile startup scandals of the year.
According to court documents filed under Case No. MCCOMMSU/E893/2025 before Hon. Mary W. Njagi at the Chief Magistrate’s Court in Milimani, Ndungu and his company, Kytabu Company Limited, are accused of orchestrating a well-coordinated scheme disguised as an investment opportunity.
The Alleged Investment Trap
The dispute traces back to January 2025, when Kytabu, through its founder Tonee Ndungu, approached the businessman with what appeared to be a promising opportunity. Ndungu, widely known in Kenya’s tech ecosystem for his charisma and links to big global players such as Mastercard Foundation, Microsoft, and Visa, reportedly convinced the investor that Kytabu was scaling up its digital learning business and needed urgent capital injection.
After a series of meetings, the businessman agreed to invest Sh5 million in exchange for a 7.5% stake in Kytabu. The deal was formalized through a convertible loan agreement signed on February 10, 2025, and the investor immediately wired the money to Kytabu’s Stanbic Bank account in Karen.
The paperwork seemed legitimate. The investor received receipts, legal letters, and written assurances that his shares would soon be reflected in Kytabu’s records. However, within weeks, communication from Ndungu and his team went silent.
Silence and Frustration
Repeated follow-ups, emails, and phone calls were ignored. Meetings were postponed indefinitely. The investor claims that Ndungu and his company failed to honor the agreement or refund the money as promised.
By July 2025, after months of frustration, the businessman filed a lawsuit through Mumbi Karoki & Company Advocates, demanding a refund of Sh6.3 million, including interest and costs. The court documents state that the plaintiff has been “kept in the dark with no income, updates, or involvement in the company.”
From Visionary to Villain
Tonee Ndungu, once celebrated as a visionary innovator, gained fame for founding Kytabu, an app designed to make textbooks accessible to students through digital platforms. He became a darling of the media and development circles, often discussing inclusive education and his own learning challenges.
However, whispers in the tech space suggest a different story of failed partnerships, unpaid collaborators, and inflated success claims. Kytabu, once hailed as a game-changer, has since faded from the market spotlight.
