Houda Ghozzi: “Investors have been more interested in the development of innovation ecosystems in Africa the past 5 years."

Leaders League: Could you summarize the pivotal steps in your career up to your current role at Open startup?

Houda Ghozzi: I began my journey in academia as a faculty and researcher, living in London, Tunisia and then Paris, where I obtained my master’s and PHD. I served as a faculty member at Paris Dauphine before heading back to Tunisia in 2006 where I was teaching for 15 years and intervening as a consultant for several governmental institutions, focusing essentially on innovation and development.

The Tunisian revolution marked a pivotal shift in my career, drawing me into the world of innovation and entrepreneurship. I started being involved in the microfinance where I worked on the national strategy with Ministry of Finance and served in the national authority as board member for 6 years and have been involved with the taskforce working on the Startup Act and still serve as a member in the national committee that grants the labels (Collège des startups).

In 2016, I have joined a training at Columbia University that was literally a game-changer, a demonstration of the power of academia when place at the center of the innovation. Open Startup (OST) clearly resulted from that that visit. OST was at first, the first cross-disciplinary student competition, encouraging yearly 100 of the highest potential student-entrepreneurs to build their venture, drawing inspiration from the American model. Since 2016, 1500 youth have been supported, more than 300 startups over which 60 are still fully operative. Today, OST has developed a whole ecosystem around its diversified programs that contribute to build strong innovation ecosystems in Africa with an intervention in Morocco, Senegal and Jordan. Our program serves startups all along their life cycle from ideation to investment readiness, including youth as well as scientists.

Could you describe the evolution of Open Start-Up, and what are your main goals and initiatives?

We are an NGO focusing on high-potential early-stage ventures. Our mission is to support entrepreneurs from under-served countries in their journey. Initially, our organization was a competition supported by a team of volunteers and funded by the US embassy, Biat Foundation and Africinvest (a PE, VC fund). After three years, we started our second chapter, focusing on a national scale-up. We standardized all the processes and transformed the competition into 13 competitions operating all across the country. We trained task forces of professors, around 200 who were supporting us in running these competitions. We then created a pre-incubator focusing on the most advanced ventures. Each year, this pre-incubator accompanies 20 to 25 startups over a hybrid 16-week program co-built with Columbia Engineering and Business schools. During that chapter, Foundation Drosos supported our programs all together with the European Union, to help us expand our activities in Africa and the MENA region, intervening in Morocco, Senegal and Jordan.

As of today, we are starting our third chapter with a new partnership with Africa Grow (DEG-KFW) that will be focusing on three main areas:  More presence in Africa adding Togo and a more embedded presence, more focus on investment readiness with our partner BPI France among others as well as a new focus on Deep Tech, through BRAIN: Bridging Research and Innovation, built in collaboration with MIT University, Africa Grow, IFC, Africinvest, Instadeep and a strong role played by Digital Africa.

We have also built a department dedicated to the community of startups, which continues to support them after they complete our programs, making sure they continue to benefit from our resources and network.

In general, it seems that Francophone countries have more room for improvement, particularly by adopting more liberal regulations to stimulate innovation, and overall, the continent has not been able to foster regional collaboration.

How would you describe the bustling ecosystems of innovative startups emerging in the MENA region - Middle East and North Africa?

Africa is a mosaic of 54 countries standing at various stages of development. We can tentatively categorize them into three main groups: the "Big 5" (South Africa, Nigeria, Egypt, Kenya and Ghana) dominating; front-runner countries such as Tunisia, and Morocco, distinguished by their unique attributes and high-performing startups; and finally, countries like Libya, Benin and Angola, where the ecosystem is still at a nascent stage.

Although this classification is not absolute, it provides a glimpse into the various dynamics at work in Africa. In general, it seems that Francophone countries have more room for improvement, particularly by adopting more liberal regulations to stimulate innovation, and overall, the continent has not been able to foster regional collaboration.

The Middle-East is another story. KSA is growing into this huge beast with the potential to become a real giant. Dubai and Abu Dhabi paved the way and might grow fostered by the dynamic of KSA. Qatar is slightly less dynamic and countries such as Jordan resemble to Tunisia, with a pool of engineer and talented youth, yet small markets that push startups to quickly exit the country, yearning for grander bigger markets.

As of today, in most African countries, while there is an overall shift in perception and startups are taken more seriously, the latter still need recognition, especially from economic players who are still the main employers and drivers of the African economies.

What are the main challenges these countries have to overcome to promote economic growth through innovation ecosystems?

Several challenges seem to hinder an economic growth driven by transformative innovation ecosystems: (1) Regulation: It is vital to establish stable and supportive regulations that allow for agility and experimentation. The dictatorial past of many countries on the continent echoes in their often-conservative regulatory framework that does not allow for economic players to take risks, fail, learn and contribute to the fabric of tomorrow’s country’s economy. (2) Scalability limits and a lack of successful exits, (3) the lack of dialogue between startups and the old economy that limits the power of innovation in driving change and building stronger and bolder economies where innovation is no longer a “marginal” sector. As of today, in most African countries, while there is an overall shift in perception and startups are taken more seriously, the latter still need recognition, especially from economic players who are still the main employers and drivers of the African economies.

The real opportunity remains in the inter-regional collaboration and the capacity of these countries to build synergetic partnerships that will allow them to grow through mergers and acquisition.

Within these ecosystems, are there sectors that stand out or develop more rapidly in the startup universe?

Africa’s entrepreneurship is not about products that are wanted but products that are needed. Most startups intervene in sectors such as fintech (remittances, mobile payment), logistics, transportation, health, as well as agritech and edtech. 

However, the specific potential of each country varies depending on its heritage as well economic, social, and geographical specificities. In Tunisia, for example, there is clearly the development of a health cluster as well as a strong AI dynamic driven by the latest success story “Instadeep”, Morocco seems to be stronger in agritech with a clear influence of players such as OCP, as well as renewable energy, Rwanda is advanced in edtech and smart city solutions, Egypt dominates in fintech, ecommerce and logistics technologies, Senegal stands out in the logistics sector. The real opportunity remains in the inter-regional collaboration and the capacity of these countries to build synergetic partnerships that will allow them to grow through mergers and acquisition, which seems to be one the most prominent growth path on the continent.

Investors have also been involved with governments to address the startups challenges related to infrastructure, access to finance and regulation.

How do you view the role of investors in the development and growth of innovation ecosystems in the MENA region, and what are the key factors to attract funding?

Investors have been more and more interested in the development of innovation ecosystems in Africa over the past 5 years. They have been allocating significant time and resources to support the entrepreneurs’ efforts, providing capital as well as mentorship and networking opportunities. Investors have also been involved with governments to address the startups challenges related to infrastructure, access to finance and regulation. Additionally, to the VC funds, Business angels, have been playing an instrumental role and often remain the missing link while the "smart capital" they provide is essential.

Attracting capital in Africa relies on several factors: showcasing the market potential and a growing consumer market, with a focus on the demographic advantage, the government support and reforms to improve the investment climate and the ease of doing business, the infrastructure development, the technological advancement and the leapfrogging capacity, as well the presence of talent and a youthful workforce with entrepreneurial spirit. Investors are drawn to the innovative ideas emerging from local champions.

Interview by Aude Ghespière