Iran's Ministry of Information and Communication Technologies provided 1.4 trillion rials ($5.6 million) in loans to startups and tech firms in the last Iranian year that ended on March 20, 2021.
According to ICT Minister Mohammad Javad Azari Jahromi, it’s the largest sum ever lent to tech firms in recent years, Peivast reported.
“The technology ecosystem is supported by several entities, including the Vice Presidential Office for Science and Technology, which prefers to pump financial resources into well-developed tech companies and boost their activities. The ICT Ministry took a different approach, focusing on providing seed capital to startups,” Jahromi explained.
Through the Noafarin Scheme, which was approved by the Cabinet in May 2019, the ICT Ministry began identifying emerging startups and assisting them in earning 5 billion rials ($20,000) per year.
“Then they can take advantage of bonuses provided by the ministry, such as tax exemptions and relief packages,” Jahromi said.
The ministry's Noafarin Fund has served as the institution's arm in allocating the loans. The fund was founded with an initial capital of 1 trillion rials ($4 million), with the ministry contributing 20% and the rest coming from the private sector.
According to the minister, about 6,000 small tech groups, entrepreneurs and fledgling companies have registered and accessed services since the scheme's inception.
Jahromi said the startup ecosystem needs more venture capital funds than small loans, adding that Noafarin Fund has managed to invest in four startup companies, although it is only expected to provide loans.
“The state's small coffers are not a suitable resource for venture capital investments because such investments entail high risks,” he said, urging private investors to join the initiative.
In addition to the Noafarin Scheme, Jahromi stated that the ICT Ministry has developed several digital economy parks across the country to follow up on the scheme's empowered tech units.
“Using the available capacities, digital economy parks in Mashhad, Semnan, Sari and Shiraz are working to increase the income of tech firms to 50 billion rials [$200,000] per year,” he said.
INIF Loans $200m
The state-affiliated Iran National Innovation Fund is the other institution tasked with boosting the startup ecosystem’s operations.
The fund lent 50 trillion rials ($200 million) to knowledge-based businesses in the last Iranian year.
Ali Vahdat, the head of INIF, said depending on the scale and field of activity of startups, low-interest loans worth 500 billion rials ($2 million) were paid, according to the fund’s website.
“These firms have matured to the point that they know how to invest the money to promote their development,” he said.
“INIF also held weekend events during which startups introduced their products and achievements to attract private investors. If they raise 20% of the money they need, the fund pays the remaining 80%.”
According to Vahdat, the strategy would curb the state’s role in financing the startup ecosystem and help firms become more independent of state support.
INIF has hosted 20 such events during the past year, connecting 125 startups with 300 investors.
“To date, over 25 startups have raised 340 billion rials [$1.36 million] during these events,” he said.
“The fund is turning the startup weekends into regular gatherings for tech firms seeking growth. A growing number of tech enthusiasts and talented students are attending these events.”
Tech Earnings
Officials believe that support for the technology ecosystem has already paid off, proving that efforts have been made in the right direction.
Mohammad Sadeq Khayyatian, an official with INIF, said earlier that the revenue of Iranian tech firms and knowledge-based companies exceeded 1.2 quadrillion rials ($4.68 billion) in the first 10 months of the last fiscal year (March 20, 2020-Jan. 19).
He noted that the income shows a 40% rise year-on-year and is estimated to reach 1.5 quadrillion rials ($6 billion) annually.
Attributing the jump partly to the sudden outbreak of the novel coronavirus disease in February 2020, the INIF official said the technology ecosystem has boosted the production of health and medical products to ward off the virus.
“Surveys have shown that 1,418 knowledge-based companies in Iran are focused on information and communication technologies, 1,267 on machinery and equipment, and 1,111 on electrical and electronic products,” he added.
Khayyatian explained that the government’s next year plan for supporting knowledge-based companies envisages tax and customs duty exemption, issuance of commercial license, social security fee cut, military service reduction and business empowerment consultations.
Export Promotion
The government is planning to help boost knowledge-based exports and make domestic industries more self-reliant.
INIF helps realize the goal through a scheme that offers tech firms four kinds of support, namely loans, warranties, investments and empowerment services.
Khayyatian said firms with international trade can receive financial support, foreign leasing, loans for foreign customers and other services to expand their export target market.
“Offering grants worth 800 million rials [$3,200] to firms for attending foreign expos is one of the other services offered by the fund to help tech firms develop foreign business ties,” he said.
According to the official, export centers were established in China, Azerbaijan, India, Iraq and Kyrgyzstan last year, which turned out to have high capacity for introducing Iranian high-tech products to the target market.
“After opening tech hubs in Kenya late January and later in Syria, officials are in talks to open similar centers in Afghanistan, Qatar and Oman,” he added.
Khayyatian said export centers provide tech firms with shared working space, the opportunity to employ local professionals for marketing, promotion of their products in small-scale exhibitions, market analysis and sales consultancy, while deploying commercial teams to publicize the firms and attract customers.
