Karandaaz Innovation

Facilitating the Ecosystem
towards Transformational Change

Innovation Challenge Fund

The Innovation Challenge Fund (ICF) was launched in 2016 with funding from the United Kingdom’s Foreign, Commonwealth, and Development Office (FCDO). The goal of ICF is to generate innovative and practicable solutions to solve complex problems in the areas of financial inclusion and entrepreneurship. ICF is especially focused on addressing barriers faced by SMEs, women and youth in accessing appropriate financial services and participating in the economy.

During a challenge fund round, calls for proposals are issued against a predefined problem. Winners are selected through a competitive process and provided risk capital or grants, depending on the nature of the theme and specific objectives of a round. Given the scale and scope of Karandaaz’s work, the ICF remains agile and dynamic in its approach to designing challenge rounds and supporting winners.For latest call for applications, please visit: https://icf.karandaaz.com.pk/

The challenge fund is managed by a lean team that is supported by an advisory committee of experts leading selection and funding decisions.


Climate change and environmental degradation constitute two of the biggest challenges of our time. Issues such as water scarcity, air quality, and waste management, among others, have plagued the majority of Pakistan’s landscape and the threat is gaining momentum. The provision of green solutions to climate and environmental degradation challenges is restricted to small localities of large cities in Pakistan. These interventions have limited adoption capacity, primarily due to technological gaps, inadequate marketing, and unavailability of risk capital. Low adoption levels deter companies, as well as investors and financial institutions, to further develop these solutions and introduce them to a larger market.

Karandaaz sought to disrupt the inertia on green transition projects and expand the spectrum of technologically driven solutions and players engaged in combating climate change in Pakistan. For this, Karandaaz announced a Green Challenge Fund and invited applications from innovative projects to support solutions in the following two thematic areas:

(i) Efficient water management and conservation (industrial, agriculture, or domestic)
(ii) Efficient plastic waste management (including clean air)

To learn more about the winners of this round of Innovation Challenge Fund, read here.

Also watch this short video to learn about the winners and their innovative green transitional projects.

Distributors in Pakistan face working capital deficiencies and extended cash conversion cycles, which have been exacerbated further as a result of Covid-19. In addition, manufacturers have been facing high costs due to an inability to convert receivables into cash on time. Distributor financing can partially bridge the credit gap faced by SMEs through instantaneous financing, relying on supply chain relationships. Karandaaz wanted to disrupt the status quo by facilitating innovative and technology-driven approaches to providing high-quality, low-risk financing to small distributors who tend to go underserved by traditional lenders. Karandaaz invited local institutions, fintechs, advisory and research firms, data analytics firms, and international organizations of a similar nature in partnership with local financial institutions to participate in this round to develop and test path-breaking financing models for small distributors in Pakistan. Grant funds have been provided for the development, operationalization, and testing of the small distributor financing solution.


Periodically, Innovation Challenge Fund launches theme based rounds and issues a call for proposals.  Eligibility criteria, including who can apply, are set in accordance with the problem that Karandaaz seeks to solve in a particular challenge round. A two-stage process is followed for selecting innovators. Initially, expressions of interest (EOI) are invited. Shortlisted innovators submit full business plans and present before a selection committee. Winners are supported with funding from Karandaaz. Post award, ICF works with innovators to transform their ideas into tested, commercially viable solutions. By demonstrating success in solving entrenched exclusions and challenges of access to finance and entrepreneurship through a commercial approach, ICF aims to stimulate the market and create knowledge spill overs across industry players.

Launched: September 2016
Status: Applications closed.

The first round of Karandaaz Pakistan’s Innovation Challenge Fund focused on improving the current mechanism of foreign remittances from Pakistani workers working in different parts of the world. Two projects are being supported under ICF Round 1 through grants:

Launched: January 2018
Status: Applications closed.

The third round of Innovation Challenge Fund (ICF 3) focused on supporting the development of innovative, cash-flow based credit scoring models for small and medium enterprises. Two projects are currently being supported under ICF Round 3. The first is with Allied Bank Limited and the second is with a consortium of Bank Alfalah Limited and DigiServ.

Read the relevant press releases here and here.




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