Launched in March 2021, Tunisia’s “Flywheel” program, a key initiative by Smart Capital, has aimed to bolster the country’s startup ecosystem. With support from the World Bank and GIZ Tunisia, the program has mobilized approximately 12.2 million Tunisian dinars (MD) ($4 million) to fund startups and ecosystem support organizations (SSOs), according to a report released by the Caisse des Dépôts et Consignations (CDC) at the Flywheel Synergy Brunch. This event, held last week, provided an opportunity for stakeholders to assess the program’s progress.

Employment Gains, But Is It Enough?

The Flywheel program has helped generate 503 jobs, with more than 385 in direct employment in Tunisia. Notably, women hold over 30% of these positions, while 35% of the supported startups are led by female founders or co-founders. These figures highlight the program’s focus on inclusivity and gender diversity. However, while this progress is commendable, the broader question remains: is this scale of impact enough to drive Tunisia’s ambitious goal of becoming a regional innovation leader?

Four Instruments, Different Results

The Flywheel program is built on four key support mechanisms, each targeting different phases of a startup’s growth:

1. AIR (Acceleration Instrument for Startups) — This mechanism focuses on startups in their early stages, providing funds to develop minimum viable products (MVPs). To date, 124 startups have benefited, with 3.7 MD ($1.2 million) disbursed to help them move from proof of concept (POC) to MVP.
2. AIR² (Investment Readiness Support) — This second mechanism prepares startups for funding rounds, offering 200,000 dinars ($65,000) to each of the 25 selected founders. While the funding is designed to make startups more attractive to investors, the real test will be whether these startups can secure larger rounds in a competitive market.
3. DEAL (Grant to Encourage New Projects) — The DEAL instrument has provided 3.1 MD ($1 million) in grants to 19 projects spearheaded by 19 SSOs, but concrete outcomes from these projects are yet to be measured. The critical challenge remains whether these SSOs can translate support into tangible growth for the startups they mentor.
4. SAIL (Support for Accredited Accelerators and Incubators) — SAIL has channeled 450,000 dinars ($147,000) to 14 SSOs. While this aims to strengthen accelerators and incubators, the impact on startup development remains unclear as few startups have progressed to regional or global scales.

Lofty Goals, Measured Results

Despite some promising numbers, Flywheel’s success largely hinges on the long-term viability of the startups it supports. To date, the program has helped many entrepreneurs take their first steps, but few have demonstrated the kind of exponential growth expected in high-impact ecosystems like those in Silicon Valley or Israel. Moreover, while women’s participation is a positive sign, the startup ecosystem as a whole remains under pressure to produce more scalable ventures capable of attracting significant investment.

A Promising Future or a Work in Progress?

Flywheel’s supporters argue that the program is still developing, with new mechanisms in the pipeline to address evolving entrepreneurial needs in Tunisia. They point to a future where Tunisia could emerge as a regional hub for innovation and startup success. However, critics note that without clear, measurable results, particularly in securing follow-on funding and expanding into international markets, these ambitions may remain out of reach.

Smart Capital, authorized by the Conseil du Marché Financier (CMF) and mandated by the government of Tunisia, has undoubtedly built a framework through Flywheel. But as the program moves into its next phases, the stakes are high. Tunisian startups need more than grants and support structures; they require sustainable access to capital, a more dynamic market environment, and regional or global growth pathways.

For Tunisia to solidify its place as a startup powerhouse, Flywheel must translate its early momentum into tangible success stories — startups that scale beyond national borders and drive lasting economic impact. Whether this can be achieved remains to be seen.