How to Obtain the Startup Label?

April 19, 2021

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efining a startup is not an easy task because the term is used loosely to describe all companies closely or remotely related to information and communication technologies. Invented at the beginning of the technological revolution in the 1970s, referring to a new generation of small companies with astonishing growth potential. However, this term became popular in the 1990s and early 2000s with the emergence of brands like Microsoft or Apple evolving at a pace never seen before.


1) But First, What Is a Startup? 


A startup is a company in the startup phase, typically seeking significant investment funds with very high potential for economic growth and financial speculation on its future value. Its phase of product innovation and development, idea testing, technology validation, or business model validation is more or less long before its commercial phase, and its risk of failure is much higher than that of other companies due to its innovative nature, small size, and lack of visibility.  


2) A Startup, a Company Unlike Others? 


Apart from the legal status, a startup differs in many ways from a traditional company. We are dealing with two types of structures that do not operate in the same way, do not have the same dynamics or objectives. 


 2-1 The Innovation Criterion of a Startup: 


The primary criterion for recognizing a startup is:

1- Innovation: This is the main difference between a traditional company and a startup. Indeed, a startup offers innovative products and services that are uncommon. Originally, a startup must bring a new idea that will lead to the creation of new markets. Whether the idea is simple or extraordinary, the goal is to change society. Therefore, ideas, products, or services that already exist can be excluded.


2- Temporary: A startup is not intended to remain one forever. Being a startup is not an end goal in itself. A startup is a particular phase, and the main objective is to get out of it. It is, as Peter Thiel, a famous entrepreneur from Silicon Valley, says, about going from 0 to 1, turning an idea into a company, finding a new way to provide a service, creating value.


3- Seeking a Business Model: Being a startup means providing value to customers with a product or service that no one has done before. And the challenge for a startup is to find and build the Business Model that goes with it. A Business Model that is not based on an existing structure, by testing various economic models and adapting as you go along based on the results obtained.


4- Industrializable Business Plan: It is the ability to replicate the same concept regardless of the city or sector. This is called an industrializable business plan. If your business is doing well, it needs to be replicable on a large scale. Creating replicas is one of the characteristics that define startups best. Let's take Uber as an example, which initially offered its services only in San Francisco! But today, we can access a service offered by Uber in most major cities. So, you need to be ready to repeat the same model. This is one of the characteristics that differentiate a classic company from a startup.


5- Effective Profitability:

In a traditional company, it takes time to start generating revenue. A lot of time if compared to the expectations of a startup. Time is not on an entrepreneur's side. Profits are needed quickly, very quickly. Whereas in a traditional company, it may take 2 or 3 years to generate revenue. 


The startup label is an institutional document that will serve as a "passport" to access all the facilities provided by the state to startups. You can only obtain this label if you have already created your company and meet certain criteria.
Specific conditions for the label: 

1- Age: The company must not have been in existence for more than eight (8) years.

2- Innovation: The company's business model must be based on innovative products or services.

3- Growth Potential: The company must have significant growth potential.

4- Annual turnover: Must not exceed the amount set by the national committee.

5- Share capital: it must be owned by at least 50% by natural persons, approved investment funds, or other companies with the "Startup" label.

6- Size: The company must not have more than 250 employees.


-Any company wishing to obtain the "Startup" label in Algeria must submit an application via the national electronic portal for startups, along with the following documents:


1- An extract from the commercial register and fiscal (NIF) and statistical (NIS) identification cards.

2- A copy of the company's legal statutes.

3- An attestation of membership in the national social insurance fund (CNAS) with a list of employees.

4- An attestation of membership in the national social security fund for non-salaried workers (CASNOS).

5- A copy of the current year's financial statements (balance sheet and income statement, ...).

6- A detailed business plan.

7- Scientific and technical qualifications and experience of the company's personnel.

8- Any intellectual property title and any prizes or awards obtained.


Note: The "Startup" label is granted to the company for a period of four (4) years, renewable once. 


What Is the Purpose of a Startup Label?: 

Companies holding the "Startup" label are exempt from the tax on professional activity (TAP), the tax on global income (IRG), or the tax on corporate profits (IBS) for a period of four (4) years, starting from the date of obtaining the "Startup" label, with an additional year in case of renewal. They are also exempt from VAT and subject to a 5% customs duty on equipment acquired directly for the implementation of their investment projects. (Article 86 of the 2021 finance law). 


On the occasion of the installation of the Commission for the Labeling of "Startups", "Incubators", and "Innovative Projects", the minister announced that this commission will meet periodically, on average twice a month, to examine requests received exclusively on the "" portal. Do you want to obtain the startup label? Visit the dedicated platform of the Ministry responsible for the economy of knowledge and startups: 




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