The Kurdistan Region is trying to change its image in the world.

For decades, outsiders have focused on Saddam Hussein, genocide, ISIS, oil, and security. All of this is significant to Kurdistan’s past and present. But if a place is known mostly through survival, it will struggle to attract investment that could give Kurdistan a prosperous future.

The best comparison is the Israeli case. Israel built one of the world’s leading start-up economies with permanent geopolitical pressure and limited natural resources.

Kurdistan faces a complex set of constraints that differ from the issues that Israel faces. It operates inside a federal system; its oil exports are dependent on politics it cannot control; its banking system is still modernizing; and it does not have Israel’s military-tech pipeline or its access to American venture capital.

Yet the comparison is useful in that Israel showed that a small and politically exposed economy can be taken seriously by investors, not just through branding but through years of public policy, research institutions, diaspora networks, venture capital, and an environment that investors learned to trust.

For Kurdistan, the lesson is more than attracting capital. It is about building the institutions that can turn that capital into an innovation economy.

Political risk has brought urgency to the question of economic diversification.

While natural resources will remain a major part of the Kurdistan Region’s (KRI’s) economy, it is still exposed to political risk. The Iraq-Turkey pipeline, which previously carried around 450,000 barrels per day from northern Iraq, was halted in 2023 after an arbitration ruling, and stayed closed for two-and-a-half years. Its resumption only came after negotiations between Iraq, Turkey, and Kurdistan. Kurdistan needs more routes to economic growth in order to absorb political pressure.

The KRG has already started to diversify away from oil. Invest Kurdistan says that the region has licensed more than 1,650 investment projects since 2006, with $80 billion invested and $14b. in foreign direct investment and joint ventures. The projects cover manufacturing, real estate, tourism, trade, and agriculture.

The next step is to shift to innovation specifically. While a hotel or housing project might create jobs, building a start-up ecosystem like Israel’s means addressing each gap in turn: access to risk capital, university-to-industry pipelines, banking infrastructure, organized diaspora investment, and foreign investors who understand the market well enough to take a risk on it.

Israel's start-up economy was allowed to flourish by a state that created conditions in which private investors had confidence. The Yozma program, launched in 1993, used public capital to attract foreign venture investors and build local venture funds. By the early 2000s, Israel’s venture capital market was driven by the private sector.

The success that followed is reflected in the numbers. Israel spends more than 6% of GDP on research and development. Its hi-tech sector accounts for roughly 12% of the workforce, around a fifth of GDP, and more than half of exports. In 2025, Israeli hi-tech firms raised $15.6b. in private funding. Despite war and political uncertainty, investors understood an ecosystem that was institutionally embedded, and therefore were willing to take a risk.

Of course, a Kurdish innovation strategy would look different from an Israeli one, because Kurdistan has its own political and economic context. Practically, it may look like using public money to encourage private investment, perhaps via a co-investment fund. The state should not be picking who gets investment, but should share risk with investors, especially those from the Kurdish diaspora who may have business or personal interest in the region.

Education is only half of a university’s job. It can also be an economic institution. Tel Aviv University’s Ramot, for example, identifies and commercializes university inventions, thereby linking academia with industry. Kurdish universities can use this structure.

In this regard, the KRI is not starting from zero. Since 2003, the region has expanded from four higher-education institutions to around 50 public and private institutions, an immense national achievement.

The British Council’s research found that 76% percent of young people in the Kurdistan Region were interested in starting their own business, while only 51% felt their education had prepared them well for work.

Kurdistan has no shortage of ambition. But it has a shortage of paths for that ambition to develop.

There are early routes, including Five One Labs, which supports entrepreneurs through training, mentorship, access to finance, and ecosystem-building. Orange Corners KRI helps entrepreneurs in the region to launch and grow businesses through incubation, mentoring, and market access.

These organizations should be viewed as a central part of the region’s economic infrastructure going forward.

Academic work also points to issues that have limited growth. A 2019 overview of entrepreneurship development in the Kurdistan Region argues that entrepreneurship could help the region address unemployment and private-sector weakness, but only if structural barriers are removed. It identifies problems that map onto the needs of a start-up economy, including limited access to capital, weak banking infrastructure, insufficient intellectual-property protection, unclear e-business regulation, limited entrepreneurship training, and weak links between universities, business centers, and local firms.

This means that a few founders or incubators are being structurally limited. An ecosystem needs to be built in which finance, law, and universities cooperate to allow for real growth.

Banking and financial reform has already started, and is absolutely crucial. While a cash-heavy economy can sustain trade and family business, start-ups require card payments, records, and official company structures.

The Kurdistan Regional Government’s (KRG’s) MyAccount program, which aims to transition public sector employees away from cash-based payments to modern digital banking, can be a central part of this shift.

In May 2026, the KRG Ministry of Finance and Economy said more than 900,000 public-sector beneficiaries had registered for bank accounts

and more than 800,000 bank cards had been delivered.

Without continued banking reform, an innovation economy will be out of reach.

THE DIASPORA is a particularly notable point of comparison between the Israeli and Kurdish cases. 

Israel has long used the Diaspora as a strategic economic asset, utilizing Jewish communities abroad to provide capital, mentorship, political backing, and access to global markets.

In turn, this created a feedback loop where Diaspora investors helped to build Israel’s start-up ecosystem, while successful Israeli firms reinforced Diaspora confidence and engagement.

The Kurdish case shares some of this, with large, established communities across Europe and North America, but differs in that these networks have not yet been integrated into a coordinated economic strategy driven by the KRI.

Some Kurdish diaspora money already goes back to the region through family support. A start-up strategy could create more formal channels for investment.

Kurdish angel networks in London, Berlin, Washington, and the Gulf could be linked to founders in Kurdistan. Mentorship programs could connect Kurdish professionals in the diaspora with students and entrepreneurs. Opportunities for Kurdish start-ups to present themselves to international investors could help shift the narrative around Kurdistan to economic potential rather than political sympathy.

The development of Kurdish soft power is therefore not only economically useful, but essential. Israel’s political risk never disappeared, but global investors understood the culture, the universities, the founders. Kurdistan needs a similar familiarity.

The launch of the Kurdistan Society in London provides a strong, albeit early-stage example of this. The society was created as a platform for strengthening ties between the Kurdish and British peoples, in cultural, academic, and economic areas.

Platforms like the Kurdistan Society can give Kurdish founders access to rooms where reputation is curated, and therefore investment decisions are made.

Israel and the idea of a Start-Up Nation sets a high standard. Kurdistan does not need to copy Israel, but it can learn from its journey from a small and politically uncertain environment to a start-up and tech superpower.

The region has the resources, with a young and educated population, some early-stage incubators, growing investment, and a diaspora with skills and capital. The challenge is bringing all of this together into a system that supports founders and attracts investment.

Migration data further reflect the stakes. The British Council’s Next Generation Iraq research found that 59% of young people in the Kurdistan Region would consider moving to another country, a number that should be hugely concerning for policy-makers.

If opportunity remains limited, ambitious young Kurds will continue to look abroad. If they can build and scale companies at home, they will strengthen the region’s economy and its long-term stability.

Kurdistan is not Israel. The constraints are different. But for both, survival still underlies every conversation, every economic decision. Innovation has given Israel greater control of its economic future.

The raw material for a Start-Up Nation already exists in Kurdistan. What it needs is the wiring to switch it on.

The writer is going into his final year studying international history and politics at the University of Leeds. A policy fellow at the Pinsker Centre, a UK- based foreign policy think tank focusing on the geopolitics of the Middle East, and a researcher at the UK Abraham Accords Group, he previously interned at UN Watch.