In a recent announcement, Yassine Walid, Minister of Knowledge Economy, Startups, and Micro-enterprises, revealed a significant milestone: over 2,300 startups have now been officially labelled under Algeria’s innovative startup labelling system. This surge is part of a broader initiative that has seen the number of auto-entrepreneurs rise to 14,000 and the creation of 104 entrepreneurial support centers designed to nurture small businesses.

The Genesis of Algeria’s Startup Labelling System

The startup labelling system, a pioneering mechanism introduced by the Ministry of Knowledge Economy, Startups, and Micro-enterprises, aims to foster a vibrant ecosystem for young innovators. This initiative has gained substantial traction since its inception, particularly among youth eager to bring their entrepreneurial dreams to life.

How to Obtain the Coveted Startup Label

Securing the “startup” label is a process grounded in clear, objective standards designed to identify and promote true innovation. Introduced by Executive Decree 20–254 on September 15, 2020, this process involves meeting one of four key criteria:

1. Research and Development Investment: The company must spend at least 15% of its revenue on R&D.
2. Founders’ Qualifications: At least half of the founding team must possess a doctorate or higher degree.
3. Intellectual Property: The company must hold an invention patent or a nationally or internationally registered program.
4. Prototype Presentation: The company must present a prototype, which can be an electronic platform, a demo version, an industrialized product, a company application, or an illustrative video.

Entrepreneurs seeking the label can apply through the dedicated website, www.startup.dz.

Benefits of Holding the Startup Label

The advantages of obtaining the startup label extend far beyond mere recognition. Labelled startups enjoy a suite of benefits designed to accelerate their growth and sustainability:

1. Tax Incentives: Startups are granted a two-year exemption from several taxes, including the tax on professional activity (TAP) and the tax on corporate profits (IBS). Additionally, equipment acquired by startups is exempt from VAT and subject to a reduced customs duty rate of 5%.
2. Generous R&D Tax Deductions: Companies investing in labelled startups can deduct up to 30% of their income or profits, with a ceiling of 200 million Algerian dinars (approximately USD $1.5 million), for R&D and open innovation expenses.
3. Financial Support Programs: Initiatives such as the “Kick Start” funding program cover essential startup expenses, including incubation, business plan development, training, incorporation, and prototyping. The program’s initial phase supports 220 project holders through 22 nationwide incubators.
4. Access to Funding: The recently established “Algeria Innovation Fund,” worth $80 million, aims to attract foreign capital for financing startups with strong international growth potential. This fund, created in collaboration with the international fund Small Enterprise Assistance Funds (SEAF), allocates $60 million for domestic startups and $20 million for their international expansion.

A Future of Promise and Potential

Minister Yassine Walid’s latest announcement underscores the government’s commitment to fostering a robust startup ecosystem in Algeria. “We have established entrepreneurial development centers (incubators) across the country,” Walid stated, “and the National Agency for the Promotion of Entrepreneurship now measures its success by the real businesses that are created.”

Walid’s optimism is echoed by international partners like SEAF, whose Director of Investments, Hubertus van der Vaart, praised Algeria’s dynamic entrepreneurial landscape and its potential for rapid growth. With ongoing efforts to create a conducive environment for startups, Algeria is poised to become a regional leader in technological advancement and economic diversification.

The startup labelling system, with its clear criteria and substantial benefits, is not only a testament to Algeria’s innovative spirit but also a beacon for young entrepreneurs striving to make a mark on the global stage. As the country continues to nurture its entrepreneurial talent, the future looks bright for Algeria’s startup ecosystem.