Besides the Startup Act, several vehicles have been developed in the Tunisian Startup Ecosystem one of which is what is referred to as FLYWHEEL, a financial support program aiming to handhold startups and their support structures. FLYWHEEL is funded by the World Bank and the German corporation through the GIZ.
FLYWHEEL was born out of a collaborative effort of many ecosystem players. Some of the major problems it was created to solve include the scarcity of early-stage investment opportunities, lack of inclusive opportunities for other Tunisian regions and women, the lack of support structures that intervene at all different levels, and a fund-gap to reach the scaleup stage & series A/B/C, among others.
FLYWHEEL relies on the grant and reimbursable subsidy. In our complimentary conversation with Ms. Salma Baghdadi, she stated that FLYWHEEL aims to provide financial support to startups and startup support organizations. The program has designed the financial instruments categorized as Proof of Concept (PoC) that grant USD$10,000 (approx. UGX36.9 million, TND31,000) to startups. The seed stage grants up to USD$60,000 (approx. UGX221.6 million, TND186,240) 60% of this is a subsidy, and 40% is a repayable subsidy.
On the other hand, DEAL is one of the other grants provided to Startup Support Organisations to launch new startup support programs that demonstrate added value in terms of expertise, positioning, or access to opportunities with gender and regional lenses.
On the contrary, FLYWHEEL has already funded over 103 startups at the prototype level, especially in AgriTech, DeepTech, and HealthTech, with 25 startups supported to raise their Series Rounds such as; Wattnow which raised USD$1.3 (approx. UGX4.8 billion, TND4.03 million), GoMyCode which raised USD$8M (approx. UGX29.5 billion, TND24.8 million) and GalacTech that exited with USD$15M (approx. UGX55.4 billion, TND46.5 million). 19 new support programs have been launched, 64 Startup Support Organisations have partnered with Flywheel and 52 tickets have been issued to Startup Support organizations valued at USD$130,000 (approx. UGX480.2 million, TND403,520).
SEE ALSO: UGANDA STARTUP POLICY DELEGATION BENCHMARKS WITH TUNISIA
The unique support system Tunisia has today originated from the Startup Act to 1,043 labeled startups and 2,340 committed founders that have created over 4,200 jobs, with welcoming innovation hubs. More to this, they have 9 active Business Angel Networks, over 500 investment operators, and 53 Startup Support Organisations that collaborate with ecosystem programs like FLYWHEEL (a financial support program), Halo (a business Angel activation program), and Invest’i (an investor matching program).
Tunisia has a lot more programs that support startups. We learned they have investment vehicles such as; ANAVA-Funds of Funds, Halo Program, the business Angels activation program, and Innovatech.
The ANAVA program is a fund dedicated to boosting Tunisia’s Venture capital ecosystem. This is part of the national strategy targeting to raise £100 million (approx. UGX477 billion, TND400.9 million) to drive a robust venture capital (VC) industry by launching 12+ VC firms dedicated to startups. Some of the programs under ANAVA include; The Funds of Funds that shall cover all stages of a startup up to maturity, The GP incubator — VC LAB, and the Guarantee program.
Already the ANAVA fund of funds portfolio today is composed of 216 Capital worth £6 million (approx. UGX28.6 billion, TND24 million), Silicon Badla worth £5.2 million (approx. UGX24.8 billion, TND20.8 million), Flat6Labs and Medin VC worth £5 million (approx. UGX23.8 billion, TND20 million), Janngo worth £4 million (approx. UGX19.08 billion, TND16.03 million) and GoBig worth £4.5 million (approx. UGX21.4 billion, TND18 million).
The Halo program, a business Angels Activation Program that is supported by SPARK and the European Union, supports business angles in four (4) verticals;
- Initiation: Where they do an angel investment training program in collaboration with Efino.
- Connection: This vertical relates to connecting Business Angels with Key players in the ecosystem.
- Assistance: This relates to the provision of technical and legal support and a toolbox.
- Co-financing: This vertical is concerned with awarding grants to startups that have raised funds from business angels.
The Halo program aspires to train over 30 aspiring business angels, support 10 investment operators, multiply angel investment in startups by three (3), and create a database of business angels.
The InnovaTech program is a fund dedicated to SMEs. This is a specialized investment fund that embraces a collective vehicle under the supervision of the Financial Markets Authority. The target size of this fund is $40M. It was learned that Smart Capital is the general partner, sponsored by Caisse des Depots et Consignations (CDC) which acts like the Uganda Development Cooperation (UDC) of Uganda. This fund runs for 10 years and targets 50 SMEs who explicitly have a technology approach to their operations.
Innovatech is embracing the power of entrepreneurship, technology, and digital transformation into Tunisian SMEs to transform its economy. It was mentioned that “InnovaTech is backed by the World Bank to support Innovative SMEs and also received a $75 million loan to fuel this vision and objectives.
Beyond startups, InnovaTech recognizes the transformative power of digitalization and innovation for all sectors. It emphasizes the importance of adaptation for businesses to remain competitive and sustainable in this dynamic landscape.
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Our brief chat with Mr. Talak Tilik, Interim Head of Smart Capital and Head of InnovaTech
How much does the startup ecosystem contribute towards the state annual?
The startup space currently contributes about 2% of Tunisian GDP.
The element of employment leave, what phenomenal advantage has this done for the Tunisian Startup ecosystem?
More than 100 out of 3,000 took leave to start a startup. If by completion of two years, you cannot stand the test of time, you would be free to go back and receive the benefits of your previous employment.
What do you mean by Good Bankruptcy, Good Failure?
The system guarantee took into account the situation in a country where we had the bankruptcy system that was created in 1993. And the procedure was very complex and would almost spoil even the personal brand of the entrepreneur. By good bankruptcy was to accept soon and move fast to another. Fortunately, they did not do that.
Why do you call it child funds? What are some of the sources you look out for funds to grant funds?
We call them child funds because they invest in other funds just so as not to create confusion, that is why they are called child funds. The government injects the same amount of funds as KFW. They have a certain ratio that they can fund so that the startups can also look for funds
What is the structure of Smart Capital for a country like Uganda that does not have any systems?
It is a fund management capital: For investments and development of the startup ecosystem as guided by the Startup Act.
I was in the DOT and two people I spoke with said they were in Europe and had to come back. Would you say the Startup Act was the reason for many of the talent returning to Tunisia?
Tradition culture in Tunisia of going to study in France, Harbototy tradition, and coming back to work in Tunisia. They basically can still headquarters in Tunisia. Tunisia has access to affordable labor and that makes us attractive to companies and increases opportunities for the human capital of Tunisians to return to Uganda.
What would you say is the biggest success factor of the startup policy?
- Equilibrium between public investment and private investment, is me to invest. The government allows private individuals to be the ones to give the private individuals, whereas the downside, is not clear for me.
- The majority of startups are developing software —and on the other hand, we need SMEs that would install this software.
- For Tunisia, we also started from scratch.
- Few ago with almost nothing working with other systems that had de-stabilised for decades.
- There was no way to calculate the reliable numbers without a Startup Act, and now we can track them.
Editor’s Note: The article is written by Keneth Twesigye; Policy Lead at Startup Uganda, and CEO of TechBuzz Hub
