Questions/Answers

The Mohammed Bin Rashid Innovation Fund (MBRIF) seeks to help the economic transformation of the UAE by supporting innovation in stages where the market doesn’t offer support. By doing so without nationality restrictions, it contributes to diversification while sustainably building upon local talent. Its priority sectors support MBRIF’s (potential) impact of other SDGs, such as Goal 3 “Health and Well being”, Goal 4 “Quality Education”, Goal 6 “Clean Water and Sanitation”, Goal 9 “Industry, Innovation and Infrastructure” and Goal 7 “Affordable Clean Energy” on which internal reporting of the (potential) impact of MBRIF and supported projects is conducted. The objective to transform the economy through innovations aligned with the National Innovation Strategy shape the economic future is a unique approach and contributes to the targets of the MoF, UAE and UN SDGs. Another objective of MBRIF is to shape the UAE’s positioning in creating entrepreneurship and sustainable, gender equal employment by fostering a culture of forward looking and responsible leaders that work in an ecosystem creating value chains beyond the innovative ideas. The selection of projects, performed by international and local experts (incl. Nobel laureates, academia) ensures consistent decision making and long term success of MBRIF for the greater good.

MBRIF as a tool to finance innovation, esp. post ideation early stage companies, is a supportive nucleus of fostering entrepreneurship, self-employment, economic progress of diversification and sustainable development (G8). The sectoral priorities it has set, align with national aspirations of the UAE and through the focus on innovation in fields of education (G4), healthcare (G3), energy (G7), water (G6) and value chain creations/enhancements (G9) indirectly unfolds its reach towards the other Goals mentioned above. The improvement of livelihood, developments for the poorest and those in need are positive intended effects of MBRIF enhancing its reach into areas of development impact.

With the Sustainable Development Agenda emphasizing the importance of inclusiveness and growth through innovation, MBRIF is positioned into being a facilitator of innovation and through it achieving SDG impact. The selection of projects (eligibility) and the aspiration to change the status quo for the better and for everyone is part of the inclusive and forward looking guidance of the UAE leadership and a reflection of the ODA/GNI ratio repeatedly outperforming the 0.7% goal. Addressing challenges in the UAE itself (incl. water (G6), energy (G7), healthcare (G3)), MBRIF serves projects as a platform to be lighthouses for innovation.

The Global Innovation Index and other key indicators identified a clear gap in “access to funding“, especially for innovators. Findings were alarming enough to decide that this is an area that requires government intervention that the Ministry of Finance was mandated to develop market stimulus. Although more financial options are available in the market, affordability of solutions was missing. MBRIF, hence, acts on behalf of the UAE government to provide a guarantee to commercial banks as security to a financier to finance innovations, mitigating the transactional risk for the bank while allowing for the innovator to flourish. This is a critical element to bring innovation relevant to the SDGs into the region and especially nurture projects for the vulnerable. SDG relevant project success stories include award winning companies in the field of literacy training for children, entrepreneurship and job placements for youth, water scarcity and food security.

MBRIF in the context of the UAE is the first government initiative to finance innovation through guarantee backing for commercial loans into innovation projects. The mitigation of risk through government support allows for local innovation to happen. MBRIF is not limited to UAE nationals and hence opens the UAE to be a platform and Launchpad for innovation. The cooperation model with the banking sector and the close alignment between government, private sector and other stakeholders as well as the hosting and operating model with the UAE Development Bank are statements towards the promotional role of the Fund.

Conceptually inspired by innovation funds in other countries (e.g. Swiss Technology Fund), MBRIF bridges a funding gap through guarantees and comforting innovators to focus on their products and services. Additions and localisations have been made to reflect the market circumstances in the UAE and innovative elements like a virtual advisory committee, future credit scoring enhancements based on social media and leveraging third party information sources such as the newly established Etihad Credit Bureau etc. have been introduced to uplift user experience at MBRIF.

We are aware of other Funds with similar mandates and direction. Our organization does, however, not have positive knowledge about these being adapted from or inspired by MBRIF or other examples.

MBRIF has been equipped with AED 2bn. (approx. USD 550mn.) to foster innovation in the UAE. The Fund is hosted and operated by the Emirates Development Bank by a team of six full time resources and has been established by a team of external consultants who also helped to build the Swiss Technology Innovation Fund, worked in International Development and other government initiatives globally. MBRIF has been launched in Innovation Week in the UAE in 2016 and has played a major role in displaying innovation and showcasing impact in the subsequent years during the Innovation months.

The sustainability is (i) anchored in the evergreen mandate of MBRIF, i.e. its long term dedication and the open ended timeframe of its market presence. In addition (ii) its openness to all nationalities and origin of innovation and (iii) the sustainable footprint of the projects delivered through the eligibility and selection criteria of MBRIF.

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The program was evaluated by independent external evaluators. PricewaterhouseCoopers (Dubai Branch) was commissioned by the Ministry of Finance to conduct an empirical evaluation of effectiveness of the MBRIF assessing the target and needs-oriented setup of the program, analyzing its’ impacts and target achievement (in particular with respect to the SDG’s). The evaluation took place two years after the programs inception, adopting a mixed-method design that involved the selection and analysis of secondary and primary data sources.

The relevant indicators were derived from the theoretical intervention logic of the MBRIF. The evaluation looked at quantitative and qualitative indicators relating to the following aspects: Relevance and suitability of the program Descriptive assessment of program activities Adequacy of the application and revision process Public Relations and stakeholder Engagement Short, medium-, and long-run impact effects Alignment with the 2030 Agenda for SDGs

The MBRIF addresses serious funding needs of regional innovators; the thorough selection process ensures that viable businesses are identified. By closing the financing gap for these companies, MBRIF creates positive short-term impact for company growth, entailing positive long-term impacts on revenues, employment and internationalization. By focusing on sectors of the national innovation strategy (e.g. Health, Education, Technology) MBRIF spurs entrepreneurial activities in areas addressing important regional challenges. From an economic perspective, impacts are expected to grow exponentially when the fund fully leaves the ramp up phase, thus significantly contributing to growth and competitiveness of the region.

The establishment of MBRIF was the result of consultations in the UAE Cabinet concerning the structural transformation of the UAE towards more diversified value chains and offering employment opportunities, inclusive growth, long-term prospects and sustainable development for all. To that end, during the design multiple stakeholder groups, including Government (PMO, MoF, MoE, EDB, local governments), Financial sector (Banking, VCs, PE) and most importantly private sector (start-ups, SMEs, universities, ecosystem) and other funds (best practices) were involved in shaping the initiative to reflect the market specifics and requirements. This included regulatory discussions to increase customer centric service, structuring the product design and testing the cornerstones with market participants and innovators. Educational requirements to create an environment of entrepreneurship were developed and further discussions focused on international co-operations for sourcing and delivering innovation and impact through partnerships, i.a. with the advisory and decision committee comprising international experts in innovation, international development, the MBRIF sectors and policy makers. The implementation was phased (pilot phase with 10 innovators before go-live) to be able to select impactful projects across the priority sectors and, based on their specifics, shape the final selection criteria, eligibility, market positioning and product suite.

Dealflow and relevant pipeline were critical elements where we learned that balancing mandate between selectiveness, degree of innovation, novelty and regional components were also critical. Applying a longer term focus of promotional mandate vs. an asset management approach was one learning experience in light of the changing market conditions of lending penetrations, VC risk appetite and other financial sector developments. The dynamic nature of the innovation ecosystem required constant re-calibration of the application of MBRIF and the traction gained (y-o-y increase by 30 - 50% in applications) required dynamic answers from a promotional instrument under fiscal and economic development policy.