Innovation and Entrepreneurship

Chapter Overview

1. Executive Summary

This chapter begins with the question left by “Research and Development”: if Iraq funds research, strengthens universities and laboratories, and establishes innovation centres, how does knowledge become an economy? The distance between a scientific paper and a company is not a single administrative step. It is a conversion chain beginning with a real problem, testing a hypothesis, building a prototype, deciding whether knowledge needs a patent, trade secret or another right, finding a customer or licensee, securing funding suited to the risk, and then expanding within Iraq or abroad. Failure at any link leaves ideas in the laboratory or turns entrepreneurship programmes into training without a market.

Iraq does not start from nothing. The Riyada initiative’s official website reports more than 524 thousand registrations at this chapter’s evidence cut-off, distributed among students, graduates and other groups. This establishes the scale of social demand for business formation, training and access to funding, but is not the number of start-ups or projects that reached the market. In 2026, the Ministry of Higher Education expanded workshops and programmes to build a university ecosystem converting knowledge into economic value, operate incubators and science and technology parks, and link research to the labour market and productive sectors. Meanwhile, the Iraq Human Capital Review concluded that existing entrepreneurship and small-business measures require wider access to finance and business development services, and improvements in the business environment and governance.¹²³

The most useful baseline counts neither events nor activities, but companies’ capacity to innovate and obtain finance. The World Bank Enterprise Survey 2022 found that, among sampled formal private non-agricultural firms with five or more workers, 18.5% had introduced a new product or service and 10.3% a process innovation, while around 12.5% of medium and large firms spent on research and development. Only 2.3% of firms had a bank loan or credit line. These indicators describe the formal business environment, not a start-up census, but reveal a conversion gap: innovation exists, while organised growth finance is weak.⁴⁵

In finance, asking banks to behave like risk capital is insufficient. The National Bank Lending Strategy 2024–2029 and Financial Inclusion Strategy 2025–2029 address broader credit and service access for businesses and individuals. Institutional work has also begun on Riyada Bank, specialising in small and medium enterprises. This infrastructure matters for ventures with cash flow, collateral or repayment capacity, but cannot alone solve the idea, prototype and high-risk technology-company stages, which need proof-of-concept grants, angel investors or venture capital before debt.⁶⁷⁸

In intellectual property, WIPO’s 2024 Iraq profile provides a clearer baseline: Iraqi resident applicants filed 569 patent applications, including 556 at the Iraqi office and 13 abroad, with 5 international PCT applications. The Iraqi office received 638 applications and granted 185 patents, with a median grant time of around 18 months. These figures do not mean that Iraq converted 569 ideas into businesses. WIPO itself cautions against using patent counts alone to measure innovation potential; value appears when a patent serves a product, licensing, investment or export strategy.⁹¹⁰

Accordingly, the chapter does not describe Iraq as having “no ecosystem”. More accurately, it has growing islands of entrepreneurship, universities, incubators, electronic registration, bank finance and intellectual-property protection, but conversion between these islands is insufficiently measured. The implementation argument is to build a “conversion system”, not another “entrepreneurship programme”: national definitions, referrals between general entrepreneurship and innovative companies, university technology transfer offices, a competitive proof-of-concept fund, co-investment led by professional investors, public procurement for innovation, commercially oriented intellectual-property services, a data observatory, and standards making incubators outcome institutions rather than property developments.

2. The Central Question and the Chapter’s Scope

The central question is: what ecosystem does Iraq need between 2027 and 2045 to turn knowledge, inventions and local problems into scalable companies, products, services and licences, and to turn normal commercial failure from the end of a path into information and experience that can be recycled, without making the state a political investor picking winners or a permanent funder of ventures the market does not want?

2.1 What This Chapter Resolves

• The operational definition of a start-up ecosystem and the difference between a small business and a scalable innovative company.

• The innovation funding ladder from proof of concept to venture investment, then credit and growth, with a different function for each instrument.

• The role of patents and other intellectual-property instruments in converting knowledge into value, and when a patent is an asset or an unnecessary cost.

• The pathway from university research results to licensing or a spin-out, and the responsibilities of the university, researcher and investor.

• The use of public procurement, first customers, markets and exports as instruments for turning innovation into an economy.

• An indicator dashboard, stages, programmes, an implementation and funding matrix, and safeguards against political capture and funding without substance.

2.2 What Remains for Other Chapters

This chapter does not revisit scientific research funding or research-university design; those belong to V3-D06-C02. It does not build national computing infrastructure or the AI strategy; that is V3-D06-C04. It does not repeat the general private-sector or export policies resolved in Part Four, but uses their results as the market and financing environment. Nor does it become detailed company or securities legislation; it sets functional tests that Iraqi legal review must address before any amendment.

3. Operational Vocabulary: What Are We Trying to Build?

4. The Iraqi Baseline: An Existing but Disconnected Ecosystem

4.1 Entrepreneurial Demand: A Large Pool That Must Not Be Called a “Start-up Count”

The Riyada initiative is the largest publicly visible national gateway in this field. Its official website’s current figure — 524,706 registrations — shows the scale of interest in training, business formation and access to finance. Its strength is its potential to become a broad national discovery layer. Its potential weakness, if mismeasured, is turning registrations or trainees into an economic success measure. A registrant may not complete training; a trainee may not establish a business; a founder may create a successful local business that does not need venture capital; and only a small group may have scalable innovation. The Vision therefore proposes two connected layers: a broad general entrepreneurship pathway, and a competitive referral pathway for innovative companies after clear validation of the problem, team and model.

4.2 Universities: From Producing Knowledge to Converting It

In 2026, the Ministry of Higher Education announced an explicit direction towards converting knowledge into economic value, addressing science and technology parks, incubators and performance indicators in workshops, while university institutions opened incubators and innovation and employment exhibitions. This is an important institutional signal: the preceding chapter builds research capability; this chapter must turn incubators from parallel activities into part of a “commercial chain” beginning with invention disclosure and ending with licensing, a company or a contract. An incubator’s measure is not rooms or participants, but the proportion progressing to a prototype, then a customer, then a company or licence, then survival and growth.¹¹¹²

4.3 Finance: Credit Matters, but It Is Not Innovation Capital

Current banking policies expand inclusion and lending for small and medium enterprises, which is essential to the business base. But a pre-revenue start-up usually lacks the cash flow to justify a conventional loan, while tangible collateral may be worth less than its team, software and intellectual property. The lending strategy itself highlights credit guarantees and gaps in movable-collateral infrastructure. Banks therefore should not be tasked with financing equity risks unsuited to their balance sheets; a funding ladder must put loans at the correct stage.¹³

4.4 Registration and Regulation: A Digital Window Exists, but Growth Extends beyond Formation

The Ur portal provides a unified electronic company-registration route covering name reservation, registration, tax number, social security number, application tracking and payment. Companies Law No. 21 of 1997 and its amendments — including the 2019 amendment — form a core legal framework. These are important gains, but do not alone answer post-formation start-up questions: how does an investor enter? How are founders’ rights structured? How are employee equity incentives granted if the law permits? How is a later round executed? How can a company that failed in good faith close and start again? The Vision’s first legislative programme is therefore a “company journey test”, not a new legal form before needs analysis.¹⁴¹⁵

4.5 Intellectual Property: Clear Patent Activity, but Commercial Gaps Cannot Be Measured by Counts

Iraq has been a member of the Patent Cooperation Treaty (PCT) since 30 April 2022 and has a patent framework, domestic applications, a national office, guidance and statistics. In July 2026, the Central Organization for Standardization and Quality Control also published monthly figures on applications, decisions and grants. This infrastructure enables a better pathway, but maximising applications is not the goal. An appropriate patent is a commercial decision: will it prevent imitation in a valuable market? Will it be licensed? Does the investor need it? Is a trade secret better? Does software protection belong under copyright or contract? Each application must pass a “value before fees” test.¹⁶¹⁷¹⁸

5. The Real Problem: Conversion Gaps between Stages

The current ecosystem can be pictured as islands: a student or graduate enters a programme; a researcher publishes or applies for a patent; a university opens an incubator; a bank announces a financing line; a company registers electronically; an entity organises an exhibition. Each island may be useful. Problems arise in the distances between them: who converts research into an invention disclosure? Who decides whether protection is necessary? Who finances the prototype? Who finds the first customer? Who establishes investor-entry terms? Who supports exports? Who measures survival after three years? When these conversions are not designed, success becomes activity within an institution rather than an outcome across the ecosystem.

6. Two Pathways, Not One: General Entrepreneurship and Innovative Companies

The first mistake in entrepreneurship policy design is placing a local shop owner, a rapidly growing software team and a pharmaceutical researcher needing five years of development under one funding programme. Their needs differ. Iraq Vision 2045 proposes “two gateways with referrals”: a broad entrepreneurship and small-business gateway focused on management skills, registration, credit, local markets and social security; and a competitive innovation gateway focused on novel solutions, validation, intellectual property, prototypes, venture capital, large customers and exports.

Riyada can become the largest discovery and referral gateway without being converted entirely into a start-up programme. A trainee demonstrating innovation or exceptional growth moves to the innovation pathway; a university team that does not need venture capital can become an ordinary small business. This flexibility prevents inflated numbers and improves the match between support and circumstances.

7. Incubators, Accelerators and Science Parks: Service before Buildings

A university or government institution may spend on an incubator building and regard it as innovation capability. This chapter reverses the logic: an incubator is a “workflow” with entry and exit conditions, human resources, and a network of experts and customers, which can operate in a simple building or digitally. A science park is not property near a university, but an environment sharing laboratories, infrastructure, equipment, ownership rules, suppliers, companies and research projects. The Vision therefore does not fund a new building before an operator, programme, demand test, operating budget and conversion indicators exist.

8. Innovation Funding: A Ladder of Instruments, Not a Single Fund

The chapter’s central financing rule is that risk changes with maturity, so the instrument must change too. An unvalidated idea cannot bear debt. A company with proven sales and cash flow can use a loan. Deep technology may require patient capital for longer than a software application. Government should not assess every company directly or determine its financial valuation. Its role at high-risk stages is to fund proof of knowledge as a public good, build data and rules, then attract a professional investor who makes the investment decision and bears a real share of losses.

8.1 Proof-of-Concept Fund: Money before the Company, Not Money Instead of the Market

The chapter proposes a “Proof-of-Concept and Prototype Programme” with small, staged competitive funding. The first instalment pays for a technical or user test; the next is disbursed only after evidence. A company need not exist at the start if the project is within a university, but knowledge ownership and the team agreement must be determined before the commercial stage. This fund does not pay general incubator salaries or cover undefined activity; it funds an experiment with a question and a result.

8.2 Co-investment: The State Mobilises, Rather than Replaces, the Investor

After establishing the 2027–2030 baseline, Iraq can create a professionally managed co-investment instrument or Fund-of-Funds that invests only alongside a qualified private investor under published rules, with exposure limits, conflict-of-interest governance and an aggregate portfolio report. Singapore’s Startup SG Equity uses co-investment with independent investors, a mechanism transferable in governance rather than scale or sectors.¹⁹

8.3 Separating Debt from Risk Capital

Lending and financial inclusion strategies and banking pathways should serve ventures that have become able to repay, while pre-revenue ventures are referred to equity or PoC instruments. This functional separation protects banks from turning start-up losses into credit defaults and protects founders from early personal debt that kills experimentation before market validation.

9. Patents and Intellectual Property: From Counting to Strategy

Iraq’s amended patent law, PCT membership and national patent office provide a framework capable of supporting the knowledge economy. Sound policy, however, begins with the commercial question before the application. Some inventions justify patents in Iraq and foreign markets; others are better kept as trade secrets; some innovation concerns software, design or trademarks; and some should be published or standardised. Protection decisions must consider registration and enforcement costs, the potential market, the speed of technological cycles and competitors’ ability to design around a patent.

WIPO recommends clear institutional policies for universities and research institutions covering ownership of results, disclosure, assessment, protection, third-party cooperation, licensing, revenue sharing, conflicts of interest and spin-out creation. It also describes a technology-transfer chain from disclosure, assessment and protection through building a business case to marketing, licensing or company formation and product development. This chain is the model to adapt to Iraqi law and institutions, rather than copying its details literally.²⁰²¹

9.1 The Patent Decision

9.2 We Do Not Target “The Largest Patent Count”

The Vision sets no raw target for resident patent applications per million people, because this indicator can be inflated. It uses it only for monitoring. The PCT target is used cautiously as an indicator of applications whose owners see potential value outside Iraq, always paired with licensing, spin-out and intellectual-property revenue figures. Examination time should also improve, without lowering examination quality to produce a quick number.

10. From University to Market: Technology Transfer Offices and Spin-outs

A research university need not become a holding company for every idea. It needs a small but strong professional function, called here a “Technology Transfer and Innovation Office” (TTO/Innovation Office). The office does more than draft patents: it receives disclosures, investigates ownership and markets, decides on protection, builds business cases, finds partners, negotiates licences and organises spin-out formation when needed. Several small universities can share a regional office rather than duplicate weak structures in each institution.

10.1 A Model University Intellectual-Property Policy

• Clearly define what belongs to the university, researcher or student and what results from external funding or industrial partnerships.

• Standardised invention disclosure with a known response time, rather than forcing researchers to find a responsible university office themselves.

• Protection decisions based on technical and market quality, with time limits preventing ideas from being held for years without a decision.

• A published formula for sharing licensing revenue among inventors and the university/laboratory, with an account returning a share to research.

• Conflict-of-interest rules when researchers establish or contract with a company, allowing participation rather than automatically treating it as wrongdoing.

• Routes for company use of laboratories and equipment at clear prices and terms, preventing open-ended hidden subsidies.

• The possibility of returning rights or licensing them to the researcher if the university decides not to invest within a defined period, subject to law.

10.2 Spin-outs Are Not the Only Goal

Licensing to an existing Iraqi company may be faster and more efficient than forming a new one. An R&D contract with a ministry or factory may be the best route. The office therefore measures “value transferred”, not spin-out counts alone. The 2045 goal is for researchers to have a clear commercial pathway in the first week after a scientific result, rather than discover the system years later.

11. The First Customer and Public Procurement for Innovation

The largest gap in many ecosystems is neither ideas nor funding, but the first customer. The Iraqi state is a major buyer in water, energy, health, education, transport, data, security and municipal services. A small, disciplined share of this purchasing power can become “challenge contracts” presenting a problem and desired outcome instead of specifications that exclude new solutions. A contract starts with a study/PoC phase, then a limited trial, followed by broader purchasing if successful, with published criteria, competitive selection and integrity safeguards.

The British SBRI experience uses public procurement to fund R&D addressing public-sector challenges through contracts, rather than grants detached from customers. Iraq should not copy British law, but can transfer the mechanism after reviewing the current Instructions for Implementing Government Contracts: a defined public problem, competitive call, stages, payment for results, a stop right and a real purchasing test.²²

12. Regulation and the Company Journey: Test Friction before Legislating a New Entity

The chapter does not assume Iraq necessarily needs a standalone “Start-up Law”. The problem may lie in applying company, tax, social security, securities, insolvency, payments or electronic contract law. The first stage therefore begins with a regulatory laboratory following a real company from formation through an investment round, hiring, and exit or closure. Each friction point is classified as law, instructions, procedure, platform, overlapping jurisdiction or a market gap.

13. Data: The Innovation Ecosystem’s First Missing Asset

The sources reviewed by the team contain no unified national database that can confidently answer simple questions: how many active innovative start-ups exist? How are they defined? How many received equity financing? How many survived three years? How many university spin-outs exist? What is licensing worth? How many active angel investors are there? How many companies export? Missing data do not mean missing activity, but leave policy vulnerable to individual stories and promotional numbers.

Iraq should launch an “Innovation and Start-up Observatory” as a data register, not a licensing authority. Every public programme providing training, money or incubation uses a unified project identifier and records entry and exit dates, stage, sector, governorate and a limited set of indicators, with secure links — not public disclosure of sensitive data — to company registration, social security, tax and trade data where law permits. The aim is to know what works, not to monitor every entrepreneur.

13.1 An International Indicator without Ranking Worship

The current Global Innovation Index 2026 covers 139 economies and renews attention to deep-tech companies and scaling. In the review undertaken for this chapter, no current Iraq country brief appeared in the accessible material; an old ranking is therefore not presented as a 2026 ranking. The first requirement is consistent national data and the coverage needed for comparison, then using rankings as an external mirror rather than a target improved by submitting superficial data.²³

14. International Comparisons: Transfer the Mechanism, Not the Country

Start-Up Chile offers an example of selecting small cohorts from many applicants for time-limited programmes, while Singapore’s models show that public capital can catalyse rather than replace private investment. Value lies not in the names but in three shared rules: competitive selection, staged funding and continuous judgement of progress towards the market.²⁴

15. Iraq’s Innovation Ecosystem in 2045

In Iraq in 2045, the “innovation ecosystem” will not be one technology city or one fund. It will be a national network: universities and laboratories producing knowledge; technology transfer offices deciding ownership and commercialisation; incubators and accelerators with outcomes; angel investors and venture funds making professional decisions; banks entering when debt becomes suitable; ministries buying innovation that solves public problems; large companies becoming customers and partners; an efficient patent office; low-friction formation and exit; data allowing funders and government to know what works; and regional and global markets rewarding quality.

The desired outcome is not to make every Iraqi an entrepreneur. An advanced economy needs researchers, engineers, specialist workers, managers, stable small businesses, large companies and professional public institutions. This chapter’s task is to make “forming an innovative venture” a possible path for those with a solution, team and market, and to make “returning to employment or another company after a venture fails” normal rather than a stigma or permanent financial collapse.

16. Transformation Stages, 2027–2045

17. Indicator and Target Dashboard

The following targets are proposed policy commitments, not forecasts. Some start from a published baseline; others require national measurement in 2027. No number becomes a “final target” before its definition and scope are verified in the first year.

Measurement decision: Registered-company counts are not a main innovation KPI. Registration is an input. Governing indicators are conversion to customers, survival, private capital, licensing, exports and added value. Nor is a GII ranking set as a rigid numerical target, because it is relative and depends on other countries’ coverage; its components are used to examine gaps once data are complete.

18. Implementation Programme Package

19. Implementation and Funding Matrix

The chapter does not set a national dinar amount for the investment or PoC fund before a financial model and pilot portfolio exist. Funding scale is a later financial decision based on absorptive capacity, deal quality and the private capital share. Expanding funds before improving project quality may inflate valuations and produce “funding companies” rather than market companies.

20. Governance: Who Decides, Who Pays and Who Measures?

The institutional challenge does not necessarily require a new “innovation authority”. Functions are already distributed: higher education covers universities, research and incubators; trade covers company registration and the business environment; the Central Bank and banks cover banking finance and inclusion; the patent body covers intellectual property; planning covers data and coordination; finance and contracting bodies cover procurement; and sectoral ministries own problems and act as customers. A small national coordination layer is needed to set definitions, indicators and programme portfolios and prevent duplication without taking executive responsibilities from existing entities.

21. Risks and safeguards

22. What Do We Not Do?

• We do not create a huge fund before a deal pipeline, data, professional manager and private participation exist.

• We do not launch an “Iraqi Silicon Valley” as property or a slogan; we build ecosystem functions first.

• We do not call every small business a start-up or impose an unneeded venture-capital model on it.

• We do not force universities to patent every result or make patent counts a sole promotion or funding criterion.

• We do not import SAFE contracts, employee options or foreign financial instruments by name before establishing their basis in Iraqi law, accounting and taxation.

• We do not use innovation procurement as a gateway to direct awards or bypassing competition.

• We do not turn entrepreneurship into a substitute for good jobs and education; it is one pathway within a broad economy.

• We do not confuse venture capital with bank credit or transfer speculative risk to deposits or the budget.

• We do not assign a start-up ecosystem figure or private company valuations from incomplete commercial databases and call it national statistics.

23. Conclusion: From Research to an Economy That Learns

Innovation is not a peripheral sector in Iraq Vision 2045; it is a mechanism that helps other sectors learn faster. Agriculture needs companies that measure water and reduce losses; industry needs suppliers improving processes; health needs new diagnostics and services; government needs digital solutions; and security, energy and transport need local technologies and adaptive capability. Yet turning every problem into a “start-up” is the opposite mistake. The state defines problems and opens data and markets; universities produce knowledge; companies test solutions; investors decide risk; and customers establish value.

If Iraq builds the chain successfully, project failure takes on a different meaning. A company without a market closes early and returns its team to the cycle with greater experience; a patent without a business case is not funded for years; an incubator that produces no ventures changes or closes; a fund that mobilises no private capital is reviewed; and a ministry that buys a successful trial expands it instead of organising another exhibition. The innovation ecosystem thus becomes a system of learning and decision-making, not activity announcements.