A city businessman has taken legal action against Kytabu Company Limited after losing Sh6.3 million in what he claims was a deliberate share transfer scam involving the firm’s co-founder, Tonee Ndungu.
The man says he believed he was investing in a legitimate technology venture only to realize later that the deal was a trap disguised as a share sale.
Court documents show that discussions between the businessman and Kytabu started in January 2025. At the time, Kytabu was being promoted as a thriving digital education company offering mobile-based learning tools for students across Kenya.
The company reportedly reached out to the investor, saying it needed capital to expand its operations. The investor agreed to inject Sh5 million in return for a 7.5 percent ownership stake, equivalent to 75 shares out of a total of 1,000.
Both sides signed a formal convertible loan agreement on February 10, 2025, witnessed and stamped, giving the arrangement an appearance of legitimacy.
Between January 31 and February 10, the investor transferred the full amount in four equal installments into Kytabu’s Stanbic Bank account located in Karen, Nairobi.
According to him, Kytabu’s management assured him that the company’s lawyers would process the share transfer and update the firm’s registry to reflect his ownership.
The investor even submitted all necessary documents by February 20, 2025, expecting everything to proceed smoothly.
But things soon changed. His advocates, Mumbi Karoki and Company, stated in court papers dated July 9, 2025, that since the payment was made, their client has been completely sidelined by Kytabu.
They claim he has received no income, updates, or involvement in the company’s affairs despite being a shareholder on paper.
The investor says all efforts to reach the company’s representatives failed as calls and emails went unanswered for months.
What started as an investment opportunity has now turned into a bitter legal fight. The businessman is demanding that Kytabu be compelled to transfer the shares as agreed or refund him the Sh6.3 million with interest and legal fees.
His lawyers argue that the company deliberately misled him for financial gain.
The matter has attracted public attention, especially within Kenya’s startup community, where similar cases of investor manipulation have quietly emerged in recent years.
Kytabu, founded by entrepreneur Tonee Ndungu, once enjoyed a strong reputation in the education technology space for its innovative learning solutions.
However, this lawsuit has cast a shadow over its credibility, with many questioning the ethics behind some of Kenya’s celebrated startups. The case has also highlighted how poorly regulated the tech investment sector remains, leaving investors vulnerable to financial loss through deceptive agreements.
The businessman’s story serves as a warning to investors eager to fund Kenya’s digital ventures. What appeared to be a promising opportunity in the country’s growing tech sector has instead become a painful lesson about trust, transparency, and accountability.
Kytabu and Ndungu have not issued any official response to the allegations, leaving many to wonder how many similar cases may still be hidden behind Kenya’s glamorous startup success stories.
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