Mehdi Alaoui, Founder and CEO, LaFactory; and Vice-President, Moroccan Federation of IT, Telecommunications and Offshoring: Interview

Interview: Mehdi Alaoui

How can public policy and the broader entrepreneurial environment encourage the proliferation and maturation of start-ups?

MEHDI ALAOUI: Since 2011 a number of stakeholders have inspired entrepreneurs and students to innovate. There have been competitions and pitches from start-ups to investors, even on the international level. We have to continue building on that momentum. To transform hope into results, we need to be able to see start-ups succeed, and that success will be defined by purchase orders going forward.

The people that found the majority of start-ups believe that the central objective is to raise funds, when the reality is that capital is just one means to attract clients. Where traditional businesses are able to stand out by using innovative products, start-ups sign contracts, which create positive profit margins.

This is a model that has proven successful among the companies of Silicon Valley. We have seen it in practice, and it can work with large companies as well. When start-ups contract with one client, it opens up the possibility of signing more, and once that happens, it becomes easier to launch products and scale up according to projected time frames.

There is a lot of optimism and potential growth in the sector, but without that initial client, start-ups risk getting stuck in an endless loop.

In terms of infrastructure, the kingdom is come up to speed and does not hold back when it comes to providing support to the sector.

How do you measure the success of individual start-ups and the sector as a whole?

ALAOUI: Incubators in the business ecosystem are helping start-ups to secure firm promises for their first significant purchase orders. Some of these clients are major public organisations, and if these entities are capable of working with start-ups, anybody can. The limits of applicability are merely an illusion. Start-ups in the ecosystem are progressing from serial pitches to innovating products and eventually obtaining purchase orders. Securing these contracts is the next crucial step in the development of the sector.

What role do you expect the Agency for Digital Development (Agence de Développement du Digital, ADD) to play in the sector’s evolution?

ALAOUI: The fact that the ADD was created sends a strong and clear message that the digital sector is important. The ADD recently appointed a new director who has already outlined 80 projects, 14 of which are top priorities. In some quarters it is wished they would move a little faster, but there are many expectations tied to its success.

This is not a straightforward task, and hopes are high in both the public and private sectors. It is a complex and difficult project that could fail if certain aspects are not prioritised. In addition, there are systemic issues that need to be addressed, although this is beyond the scope of the ADD.

To trigger major changes, as the Tunisian Start-up Act did, various stakeholders need to start working together. We need vesting pools, which will allow start-ups to pay their employees with stock options. We also need to eliminate 10% hikes on foreign services for start-ups and remove the limits on their ability to purchase space on the cloud. These changes are crucial to scaling up.

Unfortunately, many stakeholders within the Moroccan digital ecosystem have disagreements, and there is an unhealthy level of competition for a market that is not yet fully formed. If we want to resolve these issues, we have to start lobbying for the interests of the industry, and that will only be done effectively if we work hand in hand. We must set aside personal or structural interests and begin focusing together on what is best for Morocco.