IsDBI and IE University Unite to Develop Risk-Sharing Financial Solutions for Startups in Civil Law Jurisdictions

MADRID, SPAIN: The Islamic Development Bank Institute (IsDBI) has partnered with IE University Spain, through the IE Foundation, to launch a pioneering initiative aimed at designing innovative contract models that align with European legal frameworks and Islamic finance principles. This collaborative effort seeks to facilitate investment in startups and promote entrepreneurship.

The project’s primary focus is on developing financing instruments tailored to the needs of early-stage ventures operating within civil law systems. By drawing inspiration from contractual solutions commonly used in common law jurisdictions, such as convertible notes and SAFE agreements, the initiative aims to create adaptable and efficient financing models that reduce costs, complexity, and negotiation time.

Through a comprehensive approach combining research, comparative legal analysis, and contract design, the initiative will assess existing risk-sharing financing models and examine their compatibility with Islamic finance principles. The project will also identify enabling factors and legal constraints that may impact the implementation of these models within the Spanish legal framework.

Ultimately, the initiative seeks to develop a set of Shari’ah-compliant risk-sharing contract models that are fully compatible with Spanish and European Union law. These models will prioritize legal enforceability, economic efficiency, and adaptability, with the potential to be applied across EU Member States and other non-European civil law jurisdictions.

The project’s scope extends beyond early-stage ventures, as it aims to support entrepreneurship and contribute to more ethical, inclusive, and socially responsible economic development. By providing entrepreneurs with access to suitable financial tools, the initiative can help drive innovation and social value creation.

According to Dr. Sami Al-Suwailem, Acting Director General of the IsDB Institute, “this project represents a significant step forward in strengthening the Islamic finance industry by translating its core principles into legally robust instruments suitable for contemporary startup ecosystemsby anchoring these solutions in European civil law frameworks, the initiative supports the development of Islamic finance in Europe and offers scalable models adaptable to Muslim countries with civil law or hybrid legal systems.”

Dr. Celia de Anca, Deputy Dean and expert in Islamic Finance at IE University, who is leading the development of this project, noted that “ensuring entrepreneurs have access to suitable financial tools is essential for the success of their ventures and the sustainable development of local and regional economiesstartups play a key role in innovation and social value creation, and Islamic finance offers principles that are highly relevant today, but they require practical and flexible legal instruments that can work across different jurisdictions.”