Is Algeria finally getting a startup ecosystem?


Is Algeria finally getting a startup ecosystem?

Back in January, Algeria had zero coworking spaces. Today it has two easily accessible spaces, in Algiers, where entrepreneurs can meet, work, and organize events.

Is it a sign that Algeria’s startup ecosystem is growing up? Entrepreneurs hold different opinions on the topic.

Algeria is coming in late

“Algeria is very late when it comes to startup creation,” said Karim Sidi Said, a cofounder of education platform Dirassatti.

The dozen entrepreneurs we talked to agreed, and they say the first challenge is funding.

Sidi Said said funding a startup was still mission impossible. “Business angels don’t exist, banks are very cautious, governmental programs don’t cover these types of investments.”

Entrepreneurs blame the bureaucracy and Sidi Said also pointed to archaic legislation.

“The red tape requires a lot of time,” he told Wamda. “The adaptation of the commercial code to the new ITC activities is extremely slow, which prevents the development of startups.”

Scaling the monetization hurdles

Many entrepreneurs also pointed out the difficulties in monetizing online services. Startups relying on advertising revenue are in a difficult position because advertisers still won’t spend their budgets online. Startups relying on online payments are still waiting for the country’s financial system to allow online payments.

Other obstacles they’re up against are the absence of success stories to motivate them, high rents, and risk aversion - some entrepreneurs would rather keep a full time job on the side than fully committing to their business.

In spite of those challenges, the number of startups on their way to success keeps growing. In addition to online classifieds trailblazer Ouedkniss and Rocket Internet’s Ebay competitor Kaymu, several businesses stand out including Synoos, Coursella, DirassaTic and EmploiTic. Some were only created this year such as Autopub and Linkibus.

Government-funded success: zero

Algerian entrepreneurs need business training and help working through red tape and finding funding.

Since 2009, Algeria has had one public incubator within the Sidi Abdellah technoparc, which is also heavily criticized by the tech community. They say it’s inaccessible both by car and public transport and there are few organized programs.

“It’s very sad to see such investments and infrastructures unexploited and poorly managed,” said Chouaib Attoui, who is behind the Startup Weekends in Algeria.

Private incubators: one

There’s one private incubator and it has a much better reputation. Launched by telecom operator Ooredoo, it’s only open to those who have won their national business plan competition Tstart. They host and fund a few startups per year.

Sidi Said was incubated there and was positively surprised by “the interest for startups shown by the heads of Ooredoo”, their thorough work and their long term vision. “They offer incubees trainings of quality, give them access to recent and powerful equipment, they help them financially.”

But Ooredoo’s incubator can’t build the ecosystem by itself. “One incubator in a 40 million inhabitants, 70 percent of which are young, is more than insufficient,” he said.

Coworking spaces: two

The situation isn’t likely to improve soon but other types of support are coming to life.

Since the beginning of the year two coworking spaces opened in Algiers, Sylabs and The Address.

“We started to feel the lack of such spaces,” said Attaoui, to bring together the community during regular meetups and to facilitate creation and collaboration.

In these spaces Sidi Said sees an answer to a problem he encountered: the high cost of real estate. “This will tremendously help the young project holders. For very small sums, they will benefit from equipped work spaces.”  

Is Algeria ready to win at startup? (Image via Eurosport)

Collectivizing for the future

Until recently, there were no associations bringing together tech entrepreneurs in Algeria.

In late 2015, Algeria’s employer association Forum des Chefs d’Entreprises (FCE) launched Jil’FCE to mobilize and encourage business leaders under 40. It’s not dedicated to innovating entrepreneurship but it does offer young entrepreneurs of all stripes training and networking.

Inicia Networking, launched in 2015, is another network non-specific to entrepreneurs; they aim to bring together “the new generation of leaders living in Algeria or from the diaspora.”

Some digital players banded together, with the help of the government, to create Algeria Digital Cluster, a group that aims to boost the digital economy via activities such as political representation, and in June it organized a 10 startup delegation to attend Vivatechnologie in France.

Is the government stepping up?

Algeria was in crisis after the petrol price drop, but the government was aware digital companies could be a replacement, said Fouad Chennouf, cofounder of web agency and startup studio Wilab Technologie.

For a few years, new founders have been able to benefit from government subsidies which have been as criticized by entrepreneurs as the incubator.

“I think the people who wrote those conditions had nothing to do with the business world,” said Sidi Said, who pointed the finger at the obligation to have a diploma in the field you’d like to start a company in, and the “surreal number of procedures and administrative difficulties”.

The government has been making a growing number of pro-digital announcements. During the latest cabinet reshuffle, the government appointed its first deputy minister to the digital economy and modernisation of the financial systems, Mouatassim Boudiaf.

Many promises, maybe action

After years of announcements, it looks like online payments might finally be rolled out. During his first speech, Boudiaf promised big corporations would be able to implement e-payment by the end of September.

In June, the government confirmed the drafting of a law to support and boost startups and SMEs, and the creation of a seed fund - no dates have been set yet

On the ground nothing much has changed so entrepreneurs are looking to the private sector.

“Ooredoo can’t fund everything. Today, we need to put in place an ecosystem with business angels, investors, people to help with trainings,” said Lamine Ghemati, founder of the advertising startup Autopub.

During the launch of Jil’FCE, the organization announced the launch of a fund. The angel network, Casbah Business Angels, created by Algerian diaspora in the US, may also do startup investing.

The beginning of ecommerce

Created in 2014, Kaymu, launched by Rocket Internet-backed Africa Internet Group (AIG), is gaining in popularity. In April, the country’s ecommerce leader told Wamda it counted over 500,000 visits per month and was seeing an undisclosed two-figure increase in monthly sales.

For some entrepreneurs, like Attaoui, the growth of Kaymu is a problem because they’re taking the place of Algerian entrepreneurs who can’t compete with their know-how and budget.

Hakim Karriche, CTO of CRM startup Iogrow, disagrees. For him, Kaymu is bringing Algerians to ecommerce which is a good thing for Algerian startups.

New blood

“Traditional media are paying attention to the digital scene and startups,” said Sylabs founder Abdellah Mallek.

Events organized by Mallek have been attracting a diverse audience.

“Recently, Ismail Chaib came to talk about Fintech in Algerian dialect,” he said. “We ended up the session with a dozen of questions around bitcoin and blockchain when 70 percent of the participants had nothing to do with tech.” He said bank managers, business, arts and literature students, and even a former politician have attended his events.

Many noted that newcomers are more and more qualified, moved by business aspiration rather than tech interest and thus more inclined to grow successful companies.

“Today, there’s a diaspora that’s coming back and bringing their experience,” said Chennouf, who came back to France two years ago to start a company, noting that people from the corporate world were also attending.

“Before, there was only students looking to create their job [in the startup ecosystem]. Now you see executives giving up on a certain comfort to create their own startup,” said Cluster founder Ahmed Mehdi Omarouayache.

All in all, the players of the Algerian tech scene agree that the solutions lies in education, in training entrepreneurs, explaining corporate and politicians why and how they can help, and getting the media involved.

Feature image: Oran, an important coastal city in Algeria. Via Mapio

Update: The article has been edited on August, 30th to correct Mr Karim Sidi Said's position.

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