Author: Dareen Abu Qbetah
University: Jordan University
Venture capital (VC) has become a cornerstone of modern economic development, fueling innovation, entrepreneurship, and technological advancement across global markets. In emerging economies like Jordan, where small and medium-sized enterprises (SMEs) constitute over 90% of registered businesses, VC holds transformative potential , not only as a financing mechanism but as a catalyst for employment creation, economic dynamism, and inclusive opportunity.
Despite this promise, Jordan’s legal and regulatory infrastructure has historically struggled to accommodate the unique characteristics of venture capital. Traditional company laws were not designed with high-risk, equity-based financing in mind, leaving investors and startups to navigate a fragmented and often ambiguous legal landscape.
Recent changes to Jordan’s corporate legislation, particularly amendments to the Companies Law No. 22 of 1997 , have marked a turning point. These reforms introduced a formal legal identity for VC companies and began to define their operational scope.
However, significant gaps persist. Issues related to corporate structuring, investor protections, taxation, and exit strategies continue to hinder the development of a robust VC ecosystem.
This article offers a critical overview of Jordan’s evolving VC legal framework. It examines the structural and regulatory barriers that limit capital formation and entrepreneurial growth, and proposes targeted reforms to align the legal environment with the needs of a modern, innovation-driven economy.
1. The introduction to venture capital to jordanian investors:
The concept of venture capital was relatively unfamiliar to Jordanian investors until the early 2000s, when international development agencies and regional investment funds began introducing equity-based financing models to support entrepreneurship in the Levant. Initially, VC was perceived as a foreign construct risky, opaque, and incompatible with Jordan’s traditionally conservative investment culture, which favored tangible assets like real estate and trade.
This perception began to shift with the establishment of Oasis500 in 2010, a pioneering seed investment company and accelerator launched with support from the King Abdullah II Fund for Development. Oasis500 was the first local institution to operationalize VC principles in Jordan, offering early-stage startups not only capital but also structured mentorship, incubation, and follow-on investment. Its success in nurturing companies like Jamalon, Abwaab, and Bilforon helped demystify venture capital and demonstrated its potential to generate scalable, high-impact businesses.
Over the following decade, the VC landscape in Jordan expanded through a combination of public-private partnerships, regional fund activity, and the emergence of local players such as Silicon Badia, Propeller, and ISSF. These entities played a critical role in educating investors, building deal pipelines, and legitimizing VC as a viable asset class. By 2022, Jordan had recorded over $500 million in disclosed VC funding across more than 220 deals, positioning it among the top five MENA countries for startup investment activity2.
This evolution was not merely financial, it was cultural. Jordanian investors began to recognize that VC was not a speculative gamble but a strategic tool for economic diversification, technological advancement, and youth employment. The shift in mindset laid the groundwork for deeper legal and institutional reforms, which would soon follow.
2. From Standalone Regulation to Integration: Why VC Entered Jordan’s Companies Law:
As venture capital gained traction in Jordan’s investment ecosystem, the legal framework struggled to keep pace. In 2018, the government introduced Regulation No. 143 for Venture Capital Companies, a standalone piece of secondary legislation issued under the Companies Law. This regulation was a milestone ,it formally recognized VC companies as a distinct legal entity and outlined basic licensing, governance, and operational requirements.
However, the regulation’s limited scope and subordinate legal status created uncertainty. It lacked the legal weight of primary legislation and did not fully address the structural needs of VC firms, such as flexible capital structures, convertible instruments, or investor protections. Moreover, it created a parallel legal track that was difficult to reconcile with the broader corporate and investment laws governing Jordan’s business environment.
Recognizing these limitations, the Jordanian government moved to integrate VC regulation directly into the Companies Law No. 22 of 1997, through a series of amendments approved in 2022 and 2023. This shift was driven by several factors:
Legal Coherence: Embedding VC provisions within the Companies Law ensured consistency with other corporate forms and eliminated regulatory fragmentation.
Investor Confidence: Elevating VC regulation to the level of primary legislation signaled greater legal certainty and institutional commitment.
A way to Ease Enforcement: Integration allowed the Companies Control Department to supervise VC entities under a unified legal framework, streamlining oversight and compliance.
Alignment with Economic Strategy: The move supported Jordan’s broader reform agenda under the Economic Modernisation Vision, which emphasized private sector development and capital market deepening.
Today, VC companies are governed by a dedicated chapter within the Companies Law, which defines their legal personality, capital requirements, governance structure, and permissible activities. While this integration marks a significant step forward, gaps remain particularly in areas like convertible securities, exit rights, and tax treatment , which require further legislative refinement.
3.Data, Culture, and a Case Study: Understanding VC in Jordan:
The Numbers Behind the Narrative
Jordan’s venture capital ecosystem has grown steadily over the past five years, attracting $246 million across 220 disclosed deals between 2018 and 2022. This places Jordan among the top four MENA countries in terms of deal activity, though its share of total capital remains relatively modest ,hovering around 3% of regional VC volume. The average deal size remains small, reflecting a funding gap at the growth stage and a cautious investment climate.
In 2025, the market is projected to raise $27.6 million, a slight increase from the previous year, signaling resilience despite global economic uncertainty. Sectors such as e-commerce, fintech, and edtech continue to dominate, with e-commerce alone accounting for over 15% of total VC funding. However, the ecosystem still lacks late-stage capital and institutional investors capable of scaling startups beyond the seed and Series A stages.
B. Cultural Shifts and Investor Psychology:
Traditionally, Jordanian investors have gravitated toward low risk, asset backed investments, particularly in real estate and trade. Venture capital, with its long-term horizons and high failure rates, was initially perceived as speculative and foreign. This skepticism was reinforced by limited legal protections, unfamiliarity with equity-based financing, and underdeveloped exit markets.
But this narrative is changing. A young, digitally fluent population, increased exposure to global startup success stories, and the emergence of local VC champions have begun to reshape investor attitudes. There is growing recognition that venture capital is not merely a financial instrument but a strategic enabler of innovation, employment, and economic resilience.
C. Highlight: Abwaab’s Growth Story:
Abwaab, a Jordanian edtech startup founded in 2019, stands out as a leading example of successful venture-backed innovation.Designed to deliver curriculum aligned video lessons and assessments across the MENA region, Abwaab quickly gained traction for its localized content and intuitive user experience. Within three years, it secured over $27 million in funding from regional and global investors, including BECO Capital, GSV Ventures, and 4DX Ventures.
Abwaab’s trajectory illustrates the power of venture capital to unlock regional scale. It leveraged Jordan’s strong human capital in education and tech, expanded into Egypt and Pakistan, and built a product that addressed real gaps in access to quality learning. Its success also reflects the growing maturity of Jordan’s VC ecosystem, where early stage capital, mentorship, and regulatory support are beginning to converge.
4. Venture Capital’s Role in Jordan’s Economic Vision
Jordan’s Economic Modernisation Vision (EMV) aims to position the Kingdom as a competitive, innovation-driven economy by 2033 targeting over one million new jobs and a rise in per capita income. To achieve this, the EMV emphasizes entrepreneurship, private sector growth, and investment in high-impact sectors like ICT, fintech, and healthtech.
Venture capital is central to this agenda. As a financing mechanism tailored for early-stage, high-potential ventures, VC enables startups to scale innovations that align with Jordan’s strategic priorities. Programs like the Innovative Startups and SMEs Fund (ISSF) illustrate this role, mobilizing nearly $100 million to support over 150 startups, while attracting regional capital and expertise.
Crucially, VC isn’t just funding ideas, it’s fostering a culture of innovation and reinforcing Jordan’s push to become a regional hub for technology, services, and knowledge industries. Its expansion is not optional; it’s fundamental to realizing the EMV’s ambitions.
5. Legal Levers to Unlock Venture Capital Growth in Jordan:
While Jordan has taken key steps to formalize venture capital within its legal system, important gaps remain,unaddressed, if addressed, could transform the scale and impact of VC across the Kingdom. As more founders build, and more investors look toward early-stage opportunities, the question is no longer if VC will grow, but how well our legal environment will support it. The answer lies in five crucial areas of reform:
A.Modernize Investment Instruments:
Today’s Companies Law still doesn’t fully accommodate the tools used in modern VC deals, things like convertible notes, SAFEs, or preferred shares. These aren’t financial jargon, they’re practical tools that give investors confidence and founders room to grow. A legal update here would make startup fundraising smoother, clearer, and far less dependent on risky legal workarounds.
B. Create Flexible Legal Structures for VC Funds:
Most Jordanian VC firms still operate under corporate forms not designed for fund management. A purpose-built legal entity like the Variable Capital Company in Singapore or Qualified Investor Fund in the UAE would give fund managers more flexibility, while protecting investors through clear governance rules and limited liability. Rather than reinvent the wheel, Jordan can adopt legal forms that have already demonstrated success abroad.
C. Simplify Licensing and Oversight:
Right now, navigating the regulatory maze involves multiple agencies and unclear timelines. Jordan could take a big step forward by introducing a streamlined, unified licensing framework for VC firms. A single gateway clearly defined, consistently applied ,would lower barriers for first-time fund managers and increase domestic capital participation.
D. Introduce Smart Tax Incentives:
Venture capital thrives where risk is rewarded. Yet in Jordan, the tax code offers no specific incentives for VC activity, no capital gains exemptions, no tax credits for investors, no support for reinvesting gains into local funds. A few smart, targeted changes could shift investor behavior overnight and help scale local VC beyond early-stage rounds.
E. Strengthen Legal Protections and Exit Certainty:
Lastly, confidence comes from predictability. Investors need assurance that their rights especially in exits or disputes will be respected and enforced. Jordan can reinforce this by supporting shareholder protections (like drag-along and tag-along rights), recognizing VC-specific contract terms, and perhaps even piloting a specialized commercial tribunal or arbitration track for investment-related cases.
Conclusion:
In today’s economic landscape, venture capital has become indispensable to Jordan’s innovation agenda. Strengthening the legal framework isn’t about rewriting the system, but refining it. With focused reforms, Jordan can position itself not just as a regional participant in venture capital, but as a leader shaping the rules of the game. Jordan’s legal system must not merely adapt to innovation, it should shape its trajectory.
Resources:
https://www.modee.gov.jo/ebv4.0/root_storage/ar/eb_list_page/final_%282018-2022%29_modee_jordan_report_.pdf
https://hammourilaw.com/hammouri/wp-content/uploads/2024/01/Hammouri-Partners-Newsletter-Issue-40_EN.pdf
https://www.jordanvision.jo/en
https://www.worldbank.org/en/news/press-release/2025/04/08/jordan-and-world-bank-deepen-partnership-for-private-sector-led-growth-jobs-and-innovation
https://www.statista.com/outlook/fmo/capital-raising/traditional-capital-raising/venture-capital/jordan
https://hammourilaw.com/hammouri/wp-content/uploads/2024/01/Hammouri-Partners-Newsletter-Issue-40_EN.pdf
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