Tunisian startups now have a huge pool of funds to tap from to support their businesses. The World Bank Group has announced a new US$75 million fund to support the Tunisian government’s “Startup Tunisia” programme.
A Look At The New Fund
The Startup Tunisia programme is led by the country’s Ministry of Communication Technologies and Digital Economy and aims to encourage the creation and growth of tech startups and digital small businesses.
The project is a seven-year Project which will provide a comprehensive package of financing, ecosystem and firm-level support, and project management and capacity building. It will run until 31 December 2026 and includes the provision of equity and quasi-equity investment in startups and small businesses.
“This project represents concrete support for a new generation of entrepreneurs in post-revolution Tunisia,” said Anouar Maarouf, Tunisia’s minister of communication technologies and digital economy. “It is a promise from the Tunisian government towards its young and innovative entrepreneurs to develop a stronger entrepreneurship ecosystem in which their ideas and businesses can thrive and grow.”
The project is led by World Bank senior financial specialist Fadwa Bennani and comprises three components, namely:
Component 1:
Equity and Quasi-Equity Financing for Innovative Startups and SMEs (US$62 million).
Under this component, the project will provide equity and quasi-equity financing through both Start-up Capital and Smart Capital. This component will finance the provision of the following equity investments:
(a) equity and quasi-equity financing through Startup Capital Fund (through “participating financial intermediaries” or PFIs, such as Tunisian banks) to eligible innovative startups; and;
(b) equity and quasi-equity financing through Smart Capital Fund to eligible innovative SMEs.
Component 2:
Ecosystem and firm-level Support for Innovative Startups and SMEs (US$8 million):
This component aims to strengthen the pipeline of innovative start-ups and SMEs, support the entrepreneurship ecosystem, as well as provide support for firm-level adoption of innovation and technology and investment readiness.
Component 3:
Project Management and Capacity Building (US$5 million):
This component will cover costs incurred by the CDC in its role as the implementing agency. Under this component, CDC will also provide needed support to Start-up Capital and Smart Capital to deliver activities under components 1 and 2 and additional outreach and capacity building activities.
Summary of Assessment of Environmental and Social Risks and Impacts
The majority of the projects are expected to be Low Risk, specifically for investments in startups and SMEs at low ticket sizes (USD200,000 — USD500,000) and/or at low tenors (1–5 years). However, maybe a small number of investments at higher ticket sizes/tenors, as well as projects which could potentially have some negative environmental and social impacts, particularly in the SMEs.
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Project Beneficiaries
The final project beneficiaries will be innovative startups and SMEs.
The investment strategy and eligibility criteria, along with deal-flow activities, will ensure that funding is allocated to early-stage startups and high-growth technology-based SMEs.
In addition, particular focus will be made on increasing the participation of women-led startups and SMEs and on expanding project activities to lagging areas and the interior regions.
Intermediate beneficiaries will include actors that provide risk capital and business development support to innovative startups and SMEs. These actors will include private financial intermediaries, such as PE/VC funds; entrepreneurship ecosystem intermediaries, such as incubators, accelerators, and other Business Development Service (BDS) providers; and academic and research institutions.
In May last year, Tunisia passed a startup act which includes 20 measures that aim to encourage entrepreneurship, make it easier to start a business, as well as access funding and international markets.
The US$75 million Tunisia Innovative Startups and SMEs project aims to catalyze the creation and growth of digital, innovative startups and SMEs, and boost economic and employment opportunities for Tunisian youth.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.