The Maghreb region, encompassing Algeria, Morocco, and Tunisia, has been a vibrant hub of entrepreneurial activity over the past decade. Driven by a youthful population, government incentives, and the rise of digital technologies, the region’s startup ecosystem has garnered attention and investment. However, a troubling trend is emerging: Maghreb-based venture capital (VC) firms are increasingly shifting their focus away from local ventures, instead exploring opportunities in more established and stable overseas markets. This strategic pivot is largely a response to a series of high-profile startup failures within the region, prompting investors to rethink their approach to safeguarding their portfolios.
The Fall of Local Startups
One of the most significant examples of this shift is the recent move by Maroc Numeric Fund II (MNF II), a key player in Morocco’s venture capital landscape. Managed by MITC Capital, MNF II has been instrumental in nurturing the growth of Moroccan startups since its establishment in 2018. However, the fund’s strategy has come under scrutiny following the collapse of Yallah Xash, a fintech company in which MNF II had invested six million dirhams (approximately USD 605,000). Yallah Xash, which aimed to revolutionize remittance services for the Moroccan diaspora in North America, ultimately succumbed to financial instability, leading to its abrupt closure.
For MITC Capital, the challenges faced by Yallah Xash are not isolated incidents. The management of Maroc Numeric Fund I & II has observed a pattern of similar failures, including those of NetPeas, Souk Affaires.ma, Mydeal.ma, Market Plus (formerly Epicerie.ma), and OnePay. These setbacks have forced the fund to confront the harsh realities of the Moroccan startup market, where substantial investment inflows have not always translated into sustainable growth.
In response to these challenges, MNF II has begun to diversify its investment strategy, looking beyond Morocco’s borders to back overseas startups founded by Moroccan entrepreneurs. This shift consists of a recent strategic pivot that allows MNF II to invest in Moroccan talent regardless of geographic location.
Recent investments by MNF II include Upfund, a Paris-based platform providing data and insights for the real estate market, and CleanMob, another Paris-based startup focused on sustainable mobility. Both firms are led by Moroccan entrepreneurs, reflecting the fund’s continued commitment to supporting Moroccan talent, even if it means looking beyond the country’s borders.
212Founders and the Quest for Global Success
Another prominent player in Morocco’s startup ecosystem, 212Founders, is also recalibrating its investment strategy. Launched by CDG Invest in 2019, 212Founders was designed to support Moroccan startups with international aspirations. The program has successfully secured over 19 Seed and Series A financings, totaling more than 110 million dirhams (approximately USD 11 million). However, following the shutdowns of Moroccan startups such as GOA Commerce and Vigon Systems, 212Founders has shifted its focus toward accelerating and investing in predominantly foreign startups.
Recent investments by 212Founders include UserGuest, a Netherlands-based developer of hotel automation tools, and several France-based startups like VelyVelo, Estaly, Gokaden, and Entroview. This diversification strategy reflects a growing recognition that while the Moroccan market holds potential, the risks associated with local investments may outweigh the rewards.
Tunisia’s 216 Capital: Expanding Horizons
Tunisia’s 216 Capital, another leading investment firm in the Maghreb region, is also extending its reach beyond local borders. Recently, the firm announced a strategic investment in eSteps, a Boston-based digital health startup specializing in the early detection of neurodegenerative diseases. Founded in 2020 by Tunisia-born Nidhal Louhichi, eSteps has developed a smart insole technology capable of monitoring users’ movements and gait patterns, providing valuable data for the early diagnosis and management of conditions like Parkinson’s and Alzheimer’s.
Investment in eSteps follows its recent investment in UK-based AI startup Imaginario.
The Future of Maghreb VC Investments
The strategic pivot by Maghreb VC firms to overseas investments underscores the evolving nature of the region’s startup ecosystem. While local markets continue to develop, the challenges faced by early-stage companies — particularly in securing sustainable growth and financial stability — have led investors to explore opportunities in more established markets.
This trend does not signal a retreat from the Maghreb region but rather a strategic recalibration. By diversifying their portfolios and supporting Moroccan and Tunisian entrepreneurs abroad, VC firms are ensuring they remain active players in the global innovation landscape while managing the risks associated with local investments.
As these firms continue to navigate the complex dynamics of the startup ecosystem, the future of Maghreb VC investments will likely be shaped by their ability to balance local support with global ambitions. The success of these overseas ventures will play a crucial role in determining the long-term viability of investment strategies in the region, influencing the direction of startup funding for years to come.
