The World Bank report on the Jordan Innovative Startups and SMEs Fund (ISSF) goes beyond being a mere evaluation of financing programs. It provides a comprehensive assessment of how a deep structural constraint in the Jordanian economy namely, the lack of financing for startups in their early stages of development, particularly during the seed and early-growth phases has been addressed. More importantly, the report not only presents results but also offers a clear endorsement of the fund’s role, emphasizing the importance of scaling and replicating its model due to its sustained impact on the market.

 

The report begins with a precise diagnosis of Jordan’s economic landscape, which has been shaped by persistent external shocks, sluggish growth, and high unemployment. Despite the presence of a strong pool of talent and entrepreneurial potential, these capabilities have long been constrained by a traditional financing gap, particularly the absence of risk capital in early stages. This gap reflects a broader structural imbalance, where financing has been concentrated in low-risk activities, leaving innovative startups underserved.

 

In this context, the (ISSF) was designed as a response that differs from conventional policy tools. With $50 million in financing from the World Bank and total capitalization of approximately $98 million, the fund was not intended to provide direct subsidies, but rather to establish a mechanism capable of mobilizing private investment into higher-risk ventures. Through risk-sharing arrangements with investors, the fund successfully created incentives for private capital to enter the market, reflecting a shift in the role of the state—from direct financier to market catalyst.

 

The results presented in the report clearly demonstrate the effectiveness of this approach. The fund successfully mobilized approximately $108.9 million in private investments, achieving a leverage ratio of two to three times for every dollar invested. In addition, around $51 million was deployed through direct and indirect investments, within a broader investment ecosystem estimated at approximately $338 million through participating funds.

 

However, the true significance of these figures lies not only in their scale but in their nature. The project demonstrated what is referred to in economic literature as “additionality,” by enabling investments that would not have occurred under normal market conditions. This indicates that the role of the fund extended beyond financing to reshaping investor behavior and reducing perceived risk.

 

At a deeper level, this experience can be understood as a response to market failure, as it revealed the limited ability of the traditional financial sector to finance innovation in its early stages. The intervention did not replace the market, but rather reactivated it, which explains the fund’s ability to crowd in private investment instead of crowding it out. Furthermore, the project contributed to improving investment governance, by strengthening fund selection processes, enhancing investment management practices, and introducing international expertise into the local ecosystem. While these improvements are not always immediately visible in the data, they have long-term implications for market efficiency.

 

At the firm level, the fund supported around 160 startups, including 135 through investment funds and 25 through direct investment, while attracting 22 investment funds into the Jordanian market. Notably, all supported firms introduced new or improved products and processes, reflecting the innovation-driven nature of these investments.

 

In terms of economic impact, the fund has contributed, since its establishment in 2017, to the creation of approximately 2,600 direct jobs, with estimates ranging between 5,500 and 10,000 indirect jobs. Notably, 56 percent of these jobs were held by youth and 37 percent by women. The average monthly wage reached around $3,000, indicating that these jobs are concentrated in high-productivity sectors.

 

The impact extends beyond individual firms to the broader financial system, as the fund contributed to the development of a venture capital market in Jordan. This shift—from financing individual projects to building an integrated market—represents one of the most significant outcomes of the experience. Despite the challenges faced during implementation, including the COVID-19 pandemic, the fund demonstrated a strong capacity to enhance economic resilience, as supported firms—particularly in the digital sector—were able to adapt effectively.

 

The report also indicates that demand for financing remains high, with projections ranging between $234 million and $885 million over the period 2025–2030. These figures reflect the persistence of the financing gap, while also pointing to significant growth potential. Moreover, the Jordanian experience stands out as a replicable model for countries facing similar constraints, giving it relevance beyond the national context.

 

In conclusion, the World Bank report reflects not only the success of a financing initiative, but more importantly, a shift in economic thinking—from direct intervention to market creation and development. The ISSF experience demonstrates how public resources can be strategically deployed to generate multiplier effects by mobilizing private investment and stimulating economic activity. As the fund moves into its next phase, the challenge will not only be to scale financing, but to institutionalize this model as a permanent component of Jordan’s economic structure, enhancing its capacity for sustainable growth.