Yassir, an Algerian super app that is currently present in 45 cities across North Africa and West Africa, made global headlines this month when it announced a $150 million series B led by BOND, one of the world's most prolific venture funds. The company said the new capital injection, which is currently the highest single investment ever raised by any North African startup, made it the most valuable startup in North Africa and one of the few on the continent and in the Middle East. This came about eight months after Instadeep, a Tunisian artificial intelligence (AI) startup, secured a $100 million series B funding, making history as the first mega funding ($100 million investment and above) ever raised by a startup from the Maghreb region and Africa’s first mega funding in 2022.

As of November 2022, two out of five African mega investments this year came from the Maghreb region. And as expected, these new record-high metrics are bringing the region under the spotlight. “Yassir has put our ecosystem on the map. Instadeep too,” Ismail Belkhayat, co-founder and CEO of Chari, a Moroccan e-commerce platform digitizing informal retailing in Northern and French-speaking African countries, told Al-Monitor. Chari, founded in 2020, was last valued at $100 million and has made three acquisitions, including Axa Credit, the credit arm of Axa Assurance Maroc, which it bought for $22 million.

The Maghreb region, a historic island between seas of water and sand at the far end of the Arab world, consists of five countries: Morocco, Algeria, Tunisia, Mauritania and Libya. Up until quite recently, the region seldom made it into the discussion of the African startup revolution. It has, especially, existed in the shadow of Egypt, the North African market leader and one of the big four in the Africa startup scene, which also includes Nigeria, Kenya and South Africa. Excluding Libya, where consistent civil unrest continues to undermine its startup pulse, and Mauritania, which is relatively small and mostly underdeveloped, startups across the other three nations raised an estimated $72 million in 2021. Algerian startups raised $30 million; Morocco recorded an all-time high of $29 million; and Tunisia closed north of $23 million.

This is a landmark growth from the $20.1 million the entire region raised across 19 deals in 2020. But when you break these numbers down into deals and compare them to Egypt’s $600 million funding in 2021, the conversation on how disturbingly small the funding is takes the stage. While Egypt is still the leader, investors are beginning to open their coffers for the Maghreb ecosystem, and it has now raised over $260 million this year alone — over a 280% increase from what it raised between 2019 and 2021.

However, while the Maghreb startups are earning their stripes as a growth market region, it has only just begun to build its resume. For instance, the funding opportunity is still concentrated on a few startups, while early-stage startups still clamor for a piece of the cake. Yassir’s series A constituted the entire fund raised in Algeria in 2021. Expensya, a Tunisian fintech, also raised $20 million in 2021, accounting for the bulk of the $23 million that came into Tunisia, and Instadeep’s series A round of $7 million accounted for almost all that was raised in 2019. Building an ecosystem takes time and effort, but focusing investments on the few startups that have proven their business scope is definitely the best way to build it.

“It's normal,” Noureddine Tayebi, founder and CEO of Yassir, told Al-Monitor. “We need to build local champions first that will be the base of the ecosystem, which will then be an impetus for funding for other startups.” Besides solving logistics and financial hurdles in the Maghreb and francophone Africa, Tayebi built Yassir with the mindset of creating a successful business entrepreneur in the region.

The Maghreb region, like many African markets, is still predominantly seed stage with a few later-stage ventures that are expected to create a precedent or talking points for early-stage ones to reference. “In every burgeoning ecosystem, local seed initiatives (startups, accelerators and venture funds alike) leverage the success stories of later- or growth-stage startups to raise and support the new generations of entrepreneurs,” Gregoire de Padirac, a partner at Orange Ventures, told Al-Monitor. “I am impressed by the growth of our deal flow from North Africa. There is already a pool of great entrepreneurs ready to raise. I am not worried for the coming years.'

In hindsight, this means that what would become of the entire Maghreb ecosystem will most likely be determined by these companies: Algerian Yassir, Tunisian Instadeep and Expensya, and Moroccan Chari, among a few others. These startups, when and if they scale into unicorns, make exits or become behemoths, might create a ripple effect that courts investors’ confidence in the region and deployment of more funds across markets at different stages.

For instance, Careem's $3.1 billion exit to Ube in 2019 is a good example of how one startup can provoke a ripple effect in an entire region or continent. “When Careem was bought, investors began to see how much potential there was in the Middle East. Since 2019, they have continued to deploy cash into the region,” Belkhayat said. Even in West Africa, The exit of Nigeria’s Paystack to Stripe for $200 million signaled an opportunity for investors to come in and get with the next big deal. Since then, the region, Nigeria especially, continues to experience a year-on-year growth in funding across stages. Not only that, most of these early founders who are able to become unicorns, make exits or get to the series stages have also become investors, writing checks of different sizes for the seed- and pre-seed startups in their ecosystem.

Yassir’s Tayebi also believes they (Yassir and the rest) are on the path to creating the ripple effect the Maghreb region needs to experience the same tractions the big four are currently enjoying. “First we can become the funders for early-stage startups by investing directly and/or by introducing them to our network of investors,” he said.

It is now clear what must be done, and those who must do it are also aware. Considering the market nuances — market sizes, number of startups and venture funding volume — of the region this year, it’s apparent that in time funding will become available across different stages.

al-monitor.