Over 200 Innovative Start-Ups in Jordan to benefit from Early Stage Financing | World | Ammon News

Over 200 Innovative Start-Ups in Jordan to benefit from Early Stage Financing

[6/24/2017 10:16:28 AM]

AMMONNEWS - The World Bank announced Saturday a new project to promote entrepreneurship in Jordan by providing critical, early stage financing to the small and medium enterprises (SMEs) that have proven to be the engines of job creation.

The new $50 million project aims to support over 200 innovative start-ups from across the country, with the establishment of a private sector managed funding facility, according to a World Bank statement.

It said the Innovative Startups Fund Project will help launch the "Innovative Startups and SMEs Fund" (ISSF).

The $50 million investment from the World Bank will be complemented by $49 million in co-financing from the Central Bank of Jordan, bringing the total working capital of the ISSF to $99 million, the statement added.

Along with providing early stage financing, the new Fund will encourage entrepreneurship across the country with outreach to entrepreneurs from lagging regions, underserved industries and underserved groups such as women entrepreneurs, it said. "Jordan’s business ecosystem is relatively well developed. There is no lack of innovative and creative ideas. However, startup creation is low due to some barriers in the business environment and access to finance", said Kanthan Shankar, Acting Director of the World Bank Middle East Department.

"This project puts in practice the very first recommendation of the Jordanian Economic Policy Council to set up a fund to facilitate financing to innovative startups and SMEs in an effort to increase the level of startups with high-growth potential", he added The Fund is expected to invest $50 million in approximately 200 Jordanian companies and provide approximately $3.5 million in investment support to partner investors. Investments in startups will be balanced between the three high risk enterprise stages roughly categorized as: seed; early stage; and venture capital. Investments in SMEs may be in the form of equity or quasi equity instruments. Investments will be opportunistic across all sectors, but primarily in technology, media, telecommunications, service sector with some in agribusiness, pharmaceutical, water, and green energy, the statement pointed out.

"One of the main reasons that discourages an investor from taking a stake in an early-stage company is the high transaction costs incurred to help make a young innovative company successful once it receives capital", said Randa Akeel, Senior Financial Sector Economist and Task Team Leader.

"Evidence from similar World Bank projects in the region and elsewhere has shown that private investors can be attracted to contribute capital to companies that are at an earlier stage if they can share the risk and expand their portfolio", she added.

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