With a large, young, and increasingly connected population, Iraq stands out as one of the last major untapped economies in the Middle East. Yet despite its promising fundamentals, the country’s digital and startup ecosystem remains underdeveloped, fragmented, and largely informal.

EQIQ, a venture capital (VC) fund, aims to address that. Unlike traditional VC funds that invest passively invests, EQIQ operates more like a venture studio and VC hybrid, investing early, co-building companies from the ground up, and working hands-on to strengthen Iraq’s fledgling tech ecosystem.

Mohamed Al-Hakim, a serial entrepreneur and EQIQ’s co-founder, believes Iraq has huge untapped potential because of its young, eager, and tech-savvy population. However, he recognizes that while there is opportunity, inefficiencies in the market prevent industry stakeholders to connect easily. EQIQ’s mission is to close this gap by backing and co-building startups that can tackle real problems and deliver high-quality digital experiences to millions of people.

“Iraq has significant untapped potential underpinned by a young, vibrant, and tech-savvy population that is hungry to achieve,” said Al-Hakim.

“The country is underserved in many sectors, and capital has been scarce as investors have been cautious to enter a market they know little about. We founded EQIQ as a platform to bridge the gap between capital and opportunity.”

Said Rahmani, EQIQ’s founding partner and a global serial entrepreneur as well, echoes this optimism, emphasizing Iraq’s strong fundamentals and improving stability.

“We see Iraq’s strong fundamentals, rapid growth, and stabilizing outlook as a signal that the country is primed for innovation,” Rahmani said.

“The emergence of relentless entrepreneurs who are working hard to build great businesses makes it only a matter of time. Our goal is to help founders build meaningful solutions and resilient tech companies that will serve as cornerstones of the regional economy for decades to come.”

Domiciled in Abu Dhabi Global Markets (ADGM), EQIQ targets both greenfield and brownfield opportunities, primarily in e-commerce, logistics, and fintech in Iraq. Its strategy focuses on allocating 80% of its capital towards building a network of ventures that complement one another, creating synergies and strengthening the entire ecosystem as they grow and scale together.

EQIQ completed its first close in January 2023, raising US$15 million from a consortium of local and regional investors. To date, US$8.5 million has been deployed across five investments: Wayl, a payments startup;  InstaBank, an upcoming digital bank; Fedshi, a social commerce startup; Boxy, a logistics app; and Corrsy, an edtech company. Three of these ventures are being co-built by EQIQ together with founding teams from its own network.

EQIQ now plans to double the size of its fund to US$30 million to deepen its investments in Iraq’s digital economy, signaling its growing ambition to back or build more startups in Iraq. The firm aims to close the fundraise by the end of this year.

“The first US$15 million was a market test,” Al-Hakim told the National in June. “We saw very positive results, so we are expanding the fund’s size to explore even greater opportunities in Iraq,” he added, saying that they are in talks with local and foreign investors.

“Today is best time in the 11 years I’ve spent in Iraq in terms in security and political stability which has positively impacted the entrepreneurship environment,” Al-Hakim said. He aims to increase the financial returns to investors by 10 folds in the next five years.

Iraq’s thriving startup ecosystem

Iraq’s startup ecosystem is still young compared to neighboring Jordan or the UAE, but it’s growing steadily. In 2025, Iraq ranked 118th in StartupBlink’s 2025 Global Startup Ecosystem Index, rising one place from the previous year. It ranked 11th in the Middle East. Its capital city of Baghdad was listed among the top 1,000 startup cities in the world, recording an annual growth of 64.3%.

E-commerce, fintech, and delivery and logistics, are currently the most active startup areas, with trailblazers like Lezzoo, a delivery super app; Miswag, a leading e-commerce platform; Zain Cash, a prominent mobile wallet; and NEO Pay Iraq, a leading payment service provider.

One of the main drivers behind this growth is Iraq’s young and tech-savvy population. Many young Iraqis see entrepreneurship as an attractive, and sometimes necessary alternative to traditional government jobs, which are increasingly scarce.

The country is also benefiting from a digital leapfrog, with mobile phone and Internet penetration increasing significantly.

Another important factor is the Iraqi diaspora. Many founders and investors come from the large Iraqi community living abroad. These returning experts bring back valuable ideas, experience, capital, and international connections.

Local hubs and VCs like The Station, Five One Invest, and Netaj further fuel the ecosystem by offering coding bootcamps, mentorship, and startup programs. New initiatives are also emerging with Netaj, an innovation platform, announcing last month a new venture studio for Iraqi startups called Nawat. Nawat aims to support up to 40 startups annually through a hands-on model combining mentorship, product development, and investment.

Challenges remain

Despite opportunities and encouraging signs, Iraq’s startups still face significant challenges. Red tape, corruption, outdated laws, and foreign ownership restrictions all pose obstacle to growth. Furthermore, basic infrastructure gaps, including frequent electricity cuts, underdeveloped payment gateways, and limited banking services, make it difficult for startups to operate efficiently.

A lack of reliable market data further complicate decision-making for both founders and investors, limiting investments and ultimately hindering sector growth and job creation.

According to a 2023 study by Five One Invest, Iraqi startup founders mostly struggle with limited access to capital, a lack of practical investment knowledge, and closed investor networks. Investors, meanwhile, struggle with regulatory challenges and a lack of reliable data from startups, which makes them cautious. They also cited a lack of startups that meet their criteria as a key challenge.

Featured image: Edited by Fintech News Middle East, based on images by pranavkr and user6309018 via Freepik