Endeavor Jordan held the first in a series of roundtable discussions between banks and entrepreneurs last month in an attempt to find new ways of financing startups in Jordan’s historically risk-averse lending culture.
Financial institutions in Jordan and the wider region prefer to channel their funds into government programs, larger corporations, or high net-worth individuals who have the collateral, explained Reem Goussous, managing director of Endeavor Jordan.
“Banks are heavily regulated and would be lending their depositors’ money so it makes total sense for them to channel their depositors’ money into the safer option,” she said. “We need to explore options of where these companies can access finance from.”
Several entrepreneurs attended the meeting, including Penelope Shihab, CEO and founder of Monojo, a biotechnology research company based in Amman. She said bankers were very traditional and didn’t understand what innovation and entrepreneurship is all about.
“We have to describe to them that it is very risky and long-term. It has a potentially promising future but they have to wait. It’s not necessary to have a positive cash flow versus to have growth creating jobs, getting deliverables, and reaching milestones,” she said, adding that banks could create separate departments to provide venture capital and mentorship to startups.