Learnings from Tunisia's Startup Act

By Salma Baghdadi

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About this op-ed’s author

Salma Baghdadi led the implementation of the Tunisian Startup Act as ecosystem director at  Smart Capital, the entity in charge of carrying it out. 

Prior to that Salma worked for startup incubators in both Doha and Tunis. She also co- founded two tech companies herself. 

Now, Salma has turned her attention to blue tech innovation as innovation lead at WAVE, a collective platform for ocean regeneration embedded in the FII Institute. WAVE accelerates blue tech startups and engages them in tackling the ocean’s most pressing challenges.

She also advises governments and DFIs on startup ecosystem development in emerging markets through Ujenzi Advisory. 

A quick retrospective

When the Startup Act’s implementation kicked off in April 2019, the Tunisian startup ecosystem was a nascent one. Investors, founders and incubators were a very small bunch. Knowledge about startups, their peculiar model and their potential was a privilege reserved to a select few. Actors in this tiny initial ecosystem were key players in conceptualizing and writing the Startup Act.

In the 5 years that followed, the Tunisian ecosystem underwent a profound metamorphosis, undeniably triggered by the Startup Act’s application. Today, Tunisia hosts over a thousand startups while thousands of students are now eyeing a career in the space. The ecosystem has structured itself, witnessing the emergence of several incubation programs ranging from generalist to thematic ones in healthtech, fintech, AI and more. As the ecosystem matures with time, these programs are getting better and better at what they do.

The knowledge and literature surrounding the startup phenomenon are no longer a secret. Burgeoning local startup media has been instrumental in disseminating the startup gospel, which is now a topic of interest in universities, companies and public institutions.

For all of the challenges encountered and obstacles ahead, one thing remains clear: the Startup Act was a truly transformative, net positive for the Tunisian startup ecosystem. 

A unique setup

This outsized impact has a lot to do with the Act’s genesis. A couple of years before the Act’s passing, early ecosystem players and leaders (startup founders, investors, advocates) started working on a law aimed at boosting Tunisian startups. They drafted the law with the sponsorship of political leaders and public institution representatives. What was initially just a law became a broader national strategy to empower Tunisian innovators and foster a new economy: Startup Tunisia.

The Startup Tunisia vision was built on 3 pillars: an improved legal framework, boosted startup investments through a fund of funds and targeted ecosystem support. The fund of funds and ecosystem support actions were to be financially backed through a World Bank loan managed by the Tunisian Caisse des Dépôts et Consignation (CDC).

Smart Capital was then created as the official operator for this Startup Tunisia vision. It would be the link between public institutions, private companies, LPs and DFIs to deliver on it. The setup was thus unique: a private company, supported by international DFIs, was in charge of implementing a governmental law.