Challenges and Opportunities for Startup Investors in Tunisia and Morocco – Part I

Obama administration created the office of Special Representative to Muslim Communities in the State Department in order to promote economic development and combat extremism. I was fortunate enough to be invited to be part of a delegation promoting entrepreneurship in Tunisia and Morocco.

The delegation was myself, representing the WOMENA – Angel Investment Network, Yasmeen Turayhi, Global Product Marketing Lead at AdRoll, and Sharif El Badawi, Partner at 500 Startups. We interfaced with entrepreneurs, investors, and government officials, in order to come up with policy recommendations to promote entrepreneurship in Morocco and Tunisia.

In Tunisia, a nice man named Sami from the Embassy ushered us past the lines, and we got into a bulletproof SUV. And there is a file with my name waiting on the seat inside and a camera in the car. Pretty badass. From what I saw looking out the window, it is a beautiful country and I enjoy seeing it on the way to the hotel. I was working the rest of the time so didn’t see much but I think Tunisia could get a lot of tourism.

The trip started with an informal lunch and we get to know the embassy staff and State Dept representatives. This is followed by workshops given by Yasmeen and Sharif, both well-received. Next we heard pitches from Tunisian startups. Most are from Founder Institute. One company builds pre-fabricated houses. One does AI for cultural heritage sites to bring them to life for tourists. One is a loyalty program. One is a platform connecting pet owners with vets. All in all we see about ten pitches.

I was really impressed with the quality of the pitches, as coached by the Founder Institute. I could see how bright and passionate the founders are. A lot are asking for a seed round of $15k USD. $20k. $50k. And when these brilliant people are asking for a $20k seed round that will last them a year, a small part of me just wants to hand them a fistful of cash and say follow your dreeaaaaammmms!!! And run off laughing. But I’ll save that for when I’m old and rich and slightly insane. Seriously, #goals.

The thing is, Tunisia is a country of 11 million people and regulation is not conducive to startup investment. Market matters to startup growth and to startup investors. I would advise founders in Tunisia and places like it to think globally, or at the least, regionally. Plan to scale outside your country. Consider global competition as relevant. The late stage entrepreneurs I met in Tunisia became late stage by growing into France.

Chantalle Dumonceaux Tunisia Panel
On the panel with Ambassador Daniel H. Rubinstein, U.S. Ambassador to Tunisia, Mondher Khanfir of Wiki Start Up, Nazeh Ben Ammar of Carthage Business Angels and Sharif El Badawi of @500startups.

The next day, we were part of a roundtable hosted by Carthage Business Angels “World Class Startups, MENA Ecosystem and Women Entrepreneurship Development.” It was a closed session for ecosystem players.

Among our discussions, the common themes were:

Capital controls: They were cited as a main barrier. Liberalizing regulation around this will encourage more foreign direct investment and more startup activity.

Foreign ownership regulations: Tunisian startups cited that they could not have a holding company on top of their local incorporation. Tunisian regulation should change to allow full foreign ownership. This, of course is a bandaid, the real solution being a regulatory environment friendly to startups and startup investment activity, but even if that was undertaken, it would take the international community seeing precedent of fair enforcement over years to come around, so these two should be pursued concurrently.

I look forward to coming back to Tunisia when inroads are made in these areas.

Up next is the second part of this trip: Challenges and Opportunities for Startup Investors in Tunisia and Morocco – Part II.