Morocco puts $37 million into startup funds

Morocco is putting MAD347 million ($37 million) into venture capital funds that invest in the country's digital startups. The funding will run for three years under the government's Startup Catalytic Fund, which is being managed by Tamwilcom and backed by the Ministry of Digital Transition and Administrative Reform. Nine fund managers have been pre-selected for the programme. The government expects the programme to bring a lot more money into the market. The funds are expected to mobilise almost MAD2.5 billion ($268 million) in total capital for Moroccan startups. The bulk of that money would come from investors rather than the government.

That makes the structure of the programme important. Morocco is not simply setting aside $37 million and dividing it between startups. It is putting money into investment funds and relying on those funds to raise additional capital and decide which companies receive investment.

What founders could get from it

For Moroccan startups, more active local funds could mean more places to look for investment. Early stage companies often need funding before they are large enough to attract major international investors. That money can go towards hiring, product development, sales and entering new markets.

Having more venture funds in the local market could also make it easier for companies to raise follow-on funding without having to start every fundraising round with investors outside Morocco.

But the fund does not mean funding will become available to every startup. Venture capital firms will still choose the companies they want to back. They will also decide how much to invest and at what stage.

The bigger number is $268 million

The government's MAD347 million commitment is relatively small compared with the amount it wants the programme to generate. The target of almost MAD2.5 billion would give the funds more than seven times the government's initial capital to work with. That is where Morocco's approach could have a bigger effect on the startup market.

If the target is reached, there should be more money available for Moroccan technology companies and more investment firms looking for deals in the country. It could also give local investors a bigger role in financing companies that may eventually expand elsewhere in Africa.

Morocco is building around its local market

Morocco has been trying to grow its digital economy and attract more technology businesses. The startup fund is part of that wider push, but its success will come down to what happens after the funding announcements.

The venture funds still need to raise the money they have been asked to mobilise. They then need to find startups to invest in, while founders need to turn those investments into growing businesses. For Moroccan entrepreneurs, that is the part that matters.

MAD347 million has been committed. Almost MAD2.5 billion is being targeted. The difference will have to come from private investors.