In a sobering turn of events, Maroc Numeric Fund II, a prominent investment fund dedicated to supporting startups, is grappling with its first significant loss since its inception five years ago. Managed by MITC Capital, a subsidiary of the public-private entity MITC that oversees five technoparks across Morocco, the fund is writing off its investment in Yallah Xash, a Moroccan-Canadian fintech company. Less than three years ago, Maroc Numeric Fund II had invested six million dirhams (USD605,000) in Yallah Xash, a startup specializing in quick money transfers from the Moroccan diaspora to Morocco. The startup’s recent shutdown, precipitated by financial difficulties and a severe cash shortage, has left several partner organizations with outstanding debts and marks a significant setback for the fund.
Yallah Xash, founded by Emir Lallouche and Cedric Tamavond in 2017, aimed to revolutionize money transfers from North America to Morocco. The startup’s innovative approach focused on eliminating intermediaries through a smartphone application, offering three key services: App to Cash, App to Prepaid Card, and App to Bank Account. Despite its promising mission and initial success, the company’s financial instability ultimately led to its downfall, highlighting the volatile nature of the startup ecosystem.
For MITC Capital, the failure of Yallah Xash is not an isolated incident. The management of Maroc Numeric Fund I & II has seen a string of setbacks among its portfolio companies. Previous investments that faltered include NetPeas, an IT services company that failed to deliver on its SaaS security solutions; Souk Affaires.ma, an online classifieds portal that could not secure its freemium model; Mydeal.ma, a marketplace that struggled to gain traction; and Market Plus, formerly Epicerie.ma, which ventured unsuccessfully into the online food business. These failures raise concerns about the maturity and depth of the Moroccan startup market, with many experts questioning its readiness for substantial investment influxes.
Maroc Numeric Fund II’s investment in Yallah Xash marked its fourth startup investment in Morocco, and the management team’s 21st overall. Despite these setbacks, Maroc Numeric Fund has been a pivotal force in the Moroccan startup ecosystem, fostering several success stories and serving as more than just a financial backer. The fund takes an active role in guiding and overseeing its portfolio companies by holding seats on their boards, providing critical oversight, and offering strategic guidance.
The closure of Yallah Xash serves as a stark reminder of the challenges faced by fintech startups in emerging markets. It underscores the need for robust financial management and the ability to navigate complex market conditions. For Maroc Numeric Fund II, this loss also reflects broader uncertainties in the Moroccan startup landscape. With significant funds at stake, including those from the Mohammed VI Fund for Investment following a recent call for tenders, the future of startup investment in Morocco remains uncertain.