The Algerian Startup Fund (ASF) is off to a flying start. Since its establishment in January 2021, this public venture capital company has granted financing totalling 510 million Algerian dinars (3.2 million euros) to 390 start-ups, according to a report unveiled at the 2nd edition of the national start-up conference "Algeria Disrupt 2022" held on 5 March.
The start-ups financed by the fund operate in 18 sectors, including services, information and communication technologies, health, transport, tourism, biotechnology and financial services.
Equity investments for a limited time
The fund's financing is based on the mechanism of taking equity stakes in the capital of start-ups for a limited period of time, in order to "put start-ups on a sustainable growth trajectory or help them export their products and services".With a capital of 1.2 billion Algerian dinars (7.6 million euros) and held in equal parts by six public banks, including the Bank of Agriculture and Rural Development (BADR), the Crédit Populaire d'Algérie (CPA) and the External Bank of Algeria (BEA), the Algerian Start-up Financing Fund has representations in 16 wilayas (prefectures).
It only finances innovative companies with the start-up label.
According to data from the Ministry of Knowledge Economy and Start-ups, 751 companies have already been labeled start-ups out of a total of 3516 applications received by an ad hoc committee set up at the end of 2020.
Tax benefits and private funding
The start-up label allows companies to benefit from several tax and parafiscal advantages, such as exemption from business activity tax (TAP), corporate income tax and VAT on purchases for investment purposes. In addition to SRA funding, companies with the start-up label have the opportunity to benefit from land and to raise funds from local and foreign private investors.
"The environment for start-ups has improved significantly, both in terms of legal and regulatory frameworks and in terms of support and financing mechanisms”
To qualify for the start-up label, the company must have been established for a maximum of eight years. Its business model must be based on an innovative concept, its annual turnover must not exceed the amount set by the national labeling committee and at least 50% of its share capital must be held by individuals, approved investment funds or other companies with the start-up label. The company must not employ more than 250 people.
Improving the support system
During the national conference "Algeria Disrupt 2022", the Minister Delegate to the Prime Minister in charge of the Knowledge Economy and Start-ups, Yacine El Mahdi Walid, announced new measures to improve the support system for start-ups. These include the assumption by the State of the costs inherent in patents and intellectual property, the establishment of a system to evaluate and improve the performance of 38 start-up incubators and the launch of a "financial technology laboratory" to boost online payments, in cooperation with the financial market regulator, insurance companies and banks.
The Minister also announced the launch of the "MY STARTUP" application, which will allow entrepreneurs to contact the supervisory department directly to raise their concerns, in addition to managing administrative procedures and presenting the opportunities offered to innovative project holders (financing, international conferences, trade fairs, partnerships etc.).
"The environment for start-ups has improved significantly, both in terms of legal and regulatory frameworks and in terms of the support and funding mechanisms put in place by the State," he said.