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From Steve Jobs to John D. Rockefeller, the stories of an enterprising mind developing a fledgling startup into a household-name is the dream of entrepreneurs around the world. Morocco is no exception with its burgeoning startup ecosystem.
On Jan. 26, analysts Lotf Belych and Yassin El Hardouz published a report analyzing the Moroccan startup ecosystem through the examination of data and interviews with key stakeholders. Morocco World News has been given exclusivity to delve in-depth into the report’s findings.
Moroccan startup ecosystem at a glance
Morocco sees a rapidly growing number of startups each year, from a scant eight startups in 2016 to an extrapolated number of 101 startups in 2022, marking an increase of 60% each year.
Of the startups, the marketplace sector is most popular with a 20% representation, followed by mobility at 14% and FinTech (Financial Technology) at 11%.
“Morocco reached an all-time-high in 2022 with $30M invested in more than 25 funding rounds,” the report highlights.
In the last two years, six Moroccan startups exited through acquisitions, including Moteur by Avito, DabaDoc by AXA and Orange through majority stake, WaystoCap by MaxAB, Kifal by Autochek, Karny by Chari, Badeel by Sofac.
Meryem Mahfoud, partner at INSKIP Entrepreneurs, said: “Moroccan startup ecosystem is incredibly vivid: It definitely has the potential to become a regional and international hub for innovation.”
Mahfoud cited factors including “growing involvement from both Moroccan and international public institutions, talents wishing to take risks, and international investors looking at Morocco as a promising African hub for innovation.”
At an infant stage
As of now, Morocco’s startup ecosystem is still in its infant stage, with only 5% of the startups having more than 50 employees. The list features Chari, LNKO, Avito, Sobrus, Mediot, and I-City.
As such, the ecosystem has a long way to go.
Partner at Kalys Ventures Ghita Zniber spoke on her projections for what the future may hold, including more local acquisitions, more startups created by Moroccans living abroad than by locals, and more international startups integrating Morocco in their roadmap expansion.
Zniber also warns of fundraising difficulties. “If regulations do not change in favor of foreign investors, the wealth created will continue to flee with local startups continuing to open their holdings outside of Morocco to increase their chances of raising money from international players,” she said.
Challenges to overcome
Despite the support and success stories, a career in business is not always smooth sailing.
In the report’s survey, over 80 founders discussed the top reasons for startup failure in Morocco. 25% cited financial troubles and inability to raise new capital, 18% cited regulatory and legal challenges, 11% cited the lack of market need, and 11% cited not having the right team.
Founders also cited the lack of communication and charisma, society and businesses’ lack of trust in startups, and delay in client payments.
Fatima-Zahra Bennani, principal at Sawari Ventures, proposes possible solutions to the regulatory challenges. “A special accelerated regulatory track would help the Moroccan Fintechs,” she said. “B2B [business-to-business] Corporations should also have incentives to work and collaborate more efficiently with Moroccan startups.”
According to a recent report by the Moroccan firm Inforisk, more than 12,000 businesses failed in Morocco in 2022. 99% of these failed businesses were Very Small Enterprises (VSE), the report found, explaining that this grim reality for startups was partly due to the COVID-19 pandemic.
Another shortfall is the ecosystem’s gender disparity: Only 23% of founders are women. The Greentech industry sees the highest number of female-led startups at 48%, followed by the HR industry’s 36% and Health industry’s 29%.
Elhami said that she has faced challenges in the past but the ecosystem is changing.
“As a woman director and entrepreneur, I have to work twice as hard as men to be considered half as serious, but I am happy to see this changing,” she said. “In my ecosystem-supporting journey, I had the pleasure to meet many successful women who inspired me and made me realize just how much I love entrepreneurships and entrepreneurs’ energy and spirit.”
A growing support network
Morocco ranks 6th in Africa in the Startup Ecosystem Index, 5th in Africa in the number of developers, and 2nd in Africa in ease of doing business. However, Morocco’s total fund raised for startup lacks behind its other indexes, at 9th in Africa.
Zouheir Lakhdissi, Angel investor and CEO at Dial Technologies, told Belych and El Hardouz that the lack of funding “is mostly due to less flexibility when it comes to regulation that can facilitate access to the creation of real FinTech solutions facilitating interactions and transactions between users.”
The shortfall may only be temporary, however. Chief Investment Officer at UM6P Ventures Othman Chraibi believes that “more international investors are likely to be attracted to the market as the Moroccan economy continues to grow along with the growing trend of Moroccan startups expanding into international markets.”
Other avenues through which startups receive support include funds and awards.
For example, the Mohammed VI Investment Fund began in 2020 under royal instructions to support the country’s post-pandemic economic recovery, allocating MAD 15 billion ($1.5 billion) that year.
The Aviram Awards, launched by American business magazine Forbes and the Aviram Foundation, also holds competitions to support young and promising entrepreneurs in the Middle East and North Africa (MENA) region. The winner receives $500,000 (MAD 5.1 million) alongside networking opportunities, mentorship, and a profile story in Forbes.
Additionally, Huawei’s Spark program also offers financial and technical support to winners of its competition, targeted to startups focused on new technology such as cloud management and AI (artificial intelligence).
Another support network comes from startup support programs such as CEED (Center for Entrepreneurship and Executive Development).
CEED Morocco Director Sara El Mahi told MWN that networking opportunities and support within the entrepreneurial ecosystem have been some of the most invaluable assets for Moroccan startups that have made it.
“One of the things that I observed through all these years working with Moroccan startups and entrepreneurs is how similar they are and how even the most successful entrepreneurs still need a network for support and advice,” she said.
