Tunisia: Startup Tunisia, for the emergence of a nation of entrepreneurs 

Startup Tunisia is the initiative that aims to make Tunisia a true startup hub at the crossroads of the Mediterranean. Its « Annual Report 2021 » provides better understanding of the evolution of the Tunisian entrepreneurial environment locally and internationally. Let’s take a look at the highlights of the report with entrepreneurs and experts. 

By Yousra Gouja 

« We have set up the Startup College: it receives files and gives an opinion on labeling so that startups are recognized by the administrations, » says Khaled Ben Jilani, Senior Partner at AfricInvest.  Through its national Startup Tunisia program, based on three pillars, Tunisia has taken up the challenge of offering local startups the best conditions for their growth and structuring. This is building on a solid foundation, the Startup Act, the innovative legal framework that encourages new startups in Tunisia and those who wish to settle and create jobs there. Adopted in 2018, the Startup Act is based on a label of merit and a series of benefits for entrepreneurs, startups and investors. In the meantime, another scheme has been set up, Startup invest, a funding framework designed to create an ecosystem of high value-added VC (Venture Capital) funds. Similarly, Startup Ecosystem is a support framework for startups and entrepreneurial hubs that has been set up to consolidate the entrepreneurial ecosystem.

« With the idea of the startup friendly, it is necessary to waive employer and social charges and give them benefits in terms of rights as well as strong currency accounts: in euros or dollars. For micro-entrepreneurs, the idea is to provide them with grants of between 12 and 24 months, » adds Khaled Ben Jilani.  

« There is other private funding as well as the Diaspora that can do more with greater impact” 

In other words, to promote the development of an inclusive digital economy by encouraging the creation of young startups as well as the establishment of foreign startups, Tunisia has become a pioneer in Africa for the implementation of an adapted legal framework. It has become a reference point on the continent, inspiring Senegal, Rwanda and Algeria and leading to emulation of the sector at local level. Investment in startups in Tunisia will increase by 31% between 2017 and 2021, totaling $38.2 million through 54 transactions in 2020-21. In the same year, 40 new programs were launched in the country to support startups across the ecosystem, including programs and incubators such as The Dot, CoStarT, Coworky, Hive12 or Foundup.

Venture capital firm Flat6Labs has increased its Tunisia-based seed fund, Anava Seed Fund (ASF), from $3 million to $10 million. ASF was launched in 2017 in partnership with the Tunisian American Enterprise Fund, BIAT Bank and Meninx Holding. Tunisian Expensya, a maker of expense management software, raised a $20 million Series B round in May 2021. Wattnow, an intelligent energy management solution, raised a $1.3m pre-Series A in March 2022. 

That evolution of the local digital ecosystem was analyzed in the « 2021 Startup Tunisia Annual Report ». Developed based on data collection and analysis, the report is based on a form sent to 646 startups. Dissemination through mailings, phone calls and reminders resulted in 348 responses, or 53% of the startups contacted, with a margin of error of 4%.

However, not all Tunisian startups were contacted because of their special status. Samar Louati, entrepreneur and business angel says: « I have been based in Tunis for a few months. My latest startup is called ESG smarter. I am not labeled because my market is abroad and I am obliged to set up abroad and have my headquarters in England. But our research and development center is in Tunisia. « We still suffer from an archaic administration in Tunisia; we need to find the brakes and remove them,” she explains.

For his part, Haïkel Drine, founder of Afrikanda, has an idea of the potential of his native country, Tunisia: « It is the second country in Africa, after Egypt, to train engineers. At Afrikanda, we have almost 17 African nationalities working for us with personal and private funding. As for the report, he has a mixed opinion: « The report lacks startups that are not linked to funders, such as the BPI, and the others mentioned in the report are not enough to develop the Tunisian ecosystem with real added value. There is other private funding as well as the Diaspora that can do more with a better impact. »

  « Tunisia could be a haven for startups » 

Startups are showing an ability to capture and conquer their local and international markets, with an upward trend since 2019. Turnover has increased by more than 60% between 2020 and 2021. Houda Ghozzi, founder of Open Startup International says: « In economic terms, startups can be a pool of talent. Startups offer added value, even more than job creation. This changes the image of Tunisia as merely a subcontracting country.” She concludes with an ambition: « The improvement of the regulation, by making them a bit more flexible, allows international companies to be more interested in Tunisia. Tunisia could be a haven for startups, which also have few resources and live a simpler life than in Europe ».

The missing link remains to be filled, as economist Adel Ben Youssef points out: « Donors play an important role in startups, especially in internal regions. But this should remain startup financing, not growth financing. Access to credit is then the problem. Larger amounts are needed. We need to work more on coordination.” Overall, access to information is still uneven: « Local authorities are not very familiar with the startup Act. Young people waste as much time on developing as on paperwork, which limits expansions.”