A city businessman has moved to court after losing Sh6.3 million in what he describes as a carefully orchestrated share transfer scam allegedly executed by Kytabu Company Limited, a Nairobi-based technology startup co-founded by entrepreneur Tonee Ndungu.
The businessman claims he was lured into investing in the company through a seemingly genuine share transfer arrangement that later turned out to be a calculated fraud.
According to court filings,copies that have been seen by this publication, negotiations between the complainant and the company began in January 2025, when Kytabu—touted as one of Kenya’s promising tech ventures providing digital education solutions for youth—approached him seeking investment capital.
The two parties held several meetings and eventually agreed that the investor would inject Sh5 million into the company in exchange for a 7.5 percent stake, translating to 75 ordinary shares out of 1,000.
The understanding was formalized in a convertible loan agreement dated 10th February 2025, signed by both parties and witnessed.
The deal appeared airtight at least on paper. Between January 31st and February 10th, the investor transferred the full Sh5 million into Kytabu’s Stanbic Bank account in Karen, Nairobi, in four equal tranches.
Once the payments were completed, Kytabu, through its management, assured the investor that its legal counsel would process the share transfer and update the company register to reflect his new ownership. The investor says he even submitted all requested documents to facilitate the transfer by 20th February 2025.
” Since advancing the convertible loan and LPO financing to the defendant,the plaintiff has been kept in the dark without any income and involvement whatsoever in the operations and running of the business,” said Mumbi Karoki and Company advocates on behalf of the plaintiff in court documents dated July 9th,2025.
However, the assurances soon evaporated.
Weeks turned into months, and the company allegedly went silent ignoring phone calls, emails, and reminders. The businessman says Kytabu and its directors have since “neglected, failed, and refused” to transfer the agreed shares or refund the investment.
What began as a promising partnership has now devolved into a court battle. The complainant is seeking orders compelling Kytabu to honour the agreement or refund the Sh6.3 million plus interest and legal costs.
Industry insiders say the case exposes the dark side of Kenya’s tech startup scene, where ambitious entrepreneurs and flashy innovation narratives can sometimes mask questionable business practices.
Founded by Tonee Ndungu, Kytabu made its name as an education-technology company committed to improving access to learning materials through mobile and digital tools.
However, the ongoing legal dispute now threatens to taint that reputation and raise fresh concerns about investor safety in the startup ecosystem.
Kytabu and Ndungu have yet to respond publicly to the allegations.For the complainant, what was meant to be a smart investment in Kenya’s digital future has turned into a costly lesson on the perils of misplaced trust and corporate deceit.
