KOKO Networks
KOKO Networks built a clean-cooking business around ethanol fuel and cookstoves, serving more than a million households in Kenya. Its model depended heavily on carbon-credit revenue to subsidise affordable clean fuel.
The Story
KOKO's idea was compelling because the problem was enormous.
Millions of African households rely on charcoal and other traditional fuels for cooking.
That creates health problems, contributes to deforestation and produces significant emissions.
KOKO wanted to replace some of that demand with ethanol.
The company built a network of fuel dispensers and distributed specialised cookstoves, allowing households to purchase small amounts of cleaner-burning bioethanol.
But there was another part of the business model that made the economics work.
Carbon credits.
The argument was that replacing charcoal with ethanol reduced emissions, creating carbon credits that could be sold to companies looking to offset emissions.
Those revenues could then subsidise the fuel and keep it affordable for low-income customers.
At its height, KOKO claimed to serve around 1.3–1.5 million households and had raised more than $100 million, with later reporting putting total funding closer to $300 million.
The vulnerability was obvious in hindsight.
If the carbon-credit revenue disappeared, the economics of cheap ethanol became much harder to sustain.
The Turning Point
And that is exactly what happened.
In January 2026, the Kenyan government refused to provide a Letter of Authorization needed for KOKO to sell its carbon credits internationally.
The government also blocked a fuel-import authorization that was important to the company's operations.
The company quickly ran out of options.
KOKO laid off its entire workforce — around 700 people — and shut down operations.
The closure affected more than just investors and employees.
Households that had relied on KOKO fuel suddenly had to return to charcoal and other traditional fuels.
The collapse also sparked wider questions about the carbon-credit market itself.
Later reporting highlighted concerns around the assumptions used to calculate KOKO's emissions reductions and whether the number of credits generated accurately reflected real-world behaviour.
KOKO's story therefore became bigger than one startup failure.
It demonstrated the danger of building a mass-market business whose unit economics depend on an external financial mechanism that the company does not control.
Timeline
Funding
KOKO Networks raised $100M+ in total capital across its operating history. Operating for 12 years in the Clean Energy / Climate Tech sector in Kenya, capital intensity and runway constraints played a defining role in its closure.
Why It Failed
Government authorization problems made the carbon-credit-dependent model financially unsustainable
When the primary growth hypothesis or strategic acquisition discussions stalled, the business lacked the financial buffer to pivot or restructure on its own terms.
Operating in Clean Energy / Climate Tech created structural dependencies that left no room for extended clinical, distribution, or revenue delays.
Lessons for Builders
“If your unit economics depend on a market, subsidy or regulatory approval you don't control, that dependency is part of your business model — not an external detail.”