Algeria - A two-part deep dive into a potential startup giant (Part 2)
Welcome back to Part 2 of our two-part deep dive into the Algerian tech ecosystem. In Part 1, we delved into Algeria’s unique political and economic history, how this context influences its startup ecosystem, and what a startup explorer would see on the ground.
In Part 2, we are focusing on the country’s accelerators and incubators, the different forms of an Algerian founder, and the country’s deep potential for driving change within the region’s broader tech ecosystem.
Algeria’s incubators and accelerators: internally fenced but with global ambition
In the country, there are now +60 incubators, including a large majority of public incubators. Forty-four are associated with state universities across the country, and there are a handful of private incubators that have been fighting against all odds to bring the startup ecosystem to light. Apart from Crearena, IncubMe is considered Algeria’s leading incubator, having developed many successful ventures on a consistent basis. It is arguably the only incubator that has an international focus with a program that aims at using startups to connect the Algerian and Sub-Saharan markets, especially from West Africa, and in both directions.
It would also be remiss not to mention Leancubator, ACSE (dedicated to social enterprises), Womwork ( female-founding teams) and Naqltech (mobility and logistics). There are also some corporate-backed incubators, with most drawn from telecom companies (Ooredo or Djezzy) or the state-owned oil company, Sonatrach, easily the most important in the country and arguably the most influential in North Africa.
While Algeria’s incubator picture has colour in places, with some of it rich, the acceleration program landscape is sparse by comparison. Only two private accelerators are active: DZ Acceleration Program, led by Sylabs (a coworking space that offers so-called “incubation services”) and Hivos (an international aid agency). Very recently, Founders Institute announced the launch of an acceleration program in Algeria in partnership with incubator Emir Synergies.
In terms of venture capital, as briefly discussed above, the country’s current legal framework and financial system leave only the Algeria Startup Fund. Given the lack of available venture capital, the administrative burdens and the legal risks associated with entrepreneurship, there is, unfortunately, no venture builder, or startup studio in the country.
The warriors and the diaspora
Algeria’s unfriendly business environment (ranked #157 out of 190 for ease of doing business by the World Bank), chronic political and economic instability, regulatory and administrative burden, lack of tech and business infrastructure (such as data centres, cloud computing, and ability to move capital), and lack of sustainable startup support makes it a difficult market for any venture. Yet, some startups have still managed to develop, grow, and expand. When assessing the Algerian startup typology, it can be divided into two different categories.
The first are startups focused on the digitisation of basic, existing services and the reproduction of winning models that exist outside the country, reinforced by the state’s aversion to outside influence and the difficulties faced by foreign companies in setting up there. These startups are mostly founded by the Algerian tech workforce established abroad who have the skills, network, and critical cultural know-how, mindset, and experience.
This group is exemplified by Yassir, the only Algerian startup to have raised over $1m and which recently announced a $150m Series B, the highest in the region. Its founder, Noureddine Tayebi, is based in Silicon Valley, and its competitor, TemTem, whose founder Kamel Haddar is based in France and contributed to the creation of the Casbah Business Angels network, the only network of its type in Algeria. This group of startups had first mover advantage in their markets and are now expanding horizontally by adding more and more services through the same platform model — becoming “super-apps” in the process, while they wait for the authorisation to add wallets and payments.
This approval is vital since, geographically, super-app status allows them to target the Algerian diaspora in France as the remittance supplier of choice between the two countries. The next tier of priority markets lies in Francophone West Africa, which inherited comparable legal frameworks. Lastly, even if other North African and Middle East countries are digitally more advanced, if a market opportunity arises there, it is a natural third choice for geographic expansion.
The second group is that of the homemade startup, which is often associated with Polytechnique, the best engineering school in Algeria and which matches the standard of the best engineering schools in Europe. The University of Algiers is also home to some very promising agritech projects, including those associated with the blue economy. Beyond these two institutions, entrepreneurs in Algeria are mostly hackers who have bootstrapped and hacked their way to a customer base and product market fit in very different fields, such as food/parcel delivery, recycling, and insurtech.
These bootstrapped ventures often reach a glass ceiling that is hard to break due to capital available at Seed and Series A stages, preventing growth comparable to that enjoyed in neighbouring countries. Yet, their access to engineering talent and entrepreneurial attitude within a difficult operating environment leads to these ventures developing high-quality products and platforms. A medium to long-term threat facing the nascent Algerian ecosystem is that at some point, given the structural inhibitors within the ecosystem, this high-quality talent base will either be poached by overseas companies or it will depart in search of better opportunities.
Algeria is a sleeping giant nonetheless
Algeria’s potential as a centre of innovation has been limited by its political, legal and economic system for decades. Yet, this potential and the skills needed continue to exist.
The country’s young, 45-million-strong population (with 70% under 30), combined with a literacy rate of above 82% and 1.5 million students undergoing tertiary education annually, suggests that the ingredients already exist.
Intriguingly, 66% of the tertiary student population are women, suggestive of the tremendous potential that lies within the women-led ecosystem, and how it can possibly advance gender equality within Algeria.
Another critical yet untapped resource lies in its diaspora, with the majority living in France and Canada. The Algerian diaspora remains strongly attached to its country of origin. If the country can retain its skilled workers, attract investment from its diaspora communities or even encourage members of the diaspora to return, the impact could be quick and measurable. Compared to other African countries, the level of infrastructure development is among the best in the continent.
However, for Algeria to realise its potential, its technological infrastructure is still underdeveloped compared to other Sub-Saharan countries, with fibre network access low and development slow. The legal system also limits private endeavours in a number of strategic industries, such as fintech, for example, in addition to preventing foreign investments, currency exchange, and capital transfer.
If Algeria is to realise its potential as a hub of innovation in North Africa, the government will likely need to loosen the economic and regulatory reigns so that innovation that does exist within its borders is allowed to grow and mature past its current structural impediments. Possessing gifts other markets cry out for, such as its young and educated population, the fate of Algeria’s future startup ecosystem firmly rests in its own hands.
Abderrahmane Chaoui is an African ecosystem researcher, consultant, and writer. He was born a few blocks away from Ouedkniss Street in Algiers.
