Private capital does not naturally flow to high-growth innovative firms. The risks are too high, the time horizons too long, the returns too uncertain. Yet these are precisely the companies that drive innovation, create jobs, and transform economies. Morocco’s experience over the past decade offers a compelling answer to what it takes to change that: targeted, well-governed public intervention, sequenced over time and designed to crowd in private capital rather than replace it.
In 2015, an entrepreneur in Morocco with a promising technology product faced a familiar dead end. Banks required collateral she did not have. Grants were scarce. Only 6% of equity investment went to startups. Most funds typically focused on larger, established companies, with ticket sizes far beyond the USD 20,000-USD 3 million range that most early-stage firms needed. This was the “valley of death” between a good idea and a viable business.
While support for entrepreneurs was beginning to take shape, the ecosystem was underdeveloped. A handful of incubators, organizations that help entrepreneurs turn ideas into viable companies, had begun to emerge. But they remained fragmented and were not yet producing a steady pipeline of startups ready to attract investment. Institutional investors had concentrated on fixed income and real estate, and disappointing returns from an earlier generation of private equity had made them wary of risk capital. Venture capital was virtually non-existent, and the regulatory framework for equity investment remained largely untested.
InnovInvest set out to bridge this gap.
