The Iran National Innovation Fund, backed by the government, has laid the groundwork for the general public to make micro-investment in startups and technology firms.
According to Ali Nazemi, INIF's deputy for investment, the public funding scheme is designed to engage the general public in supporting the growth of technology ecosystem as a new financial resource, in addition to government resources and major private investments, Mehr News Agency reported.
“The public will be able to scrutinize the tech projects and startups with the help of INIF and decide where to put their capital,” he added.
Following evaluations and investigations, 24 projects in information and communications technologies, machinery, medical science, nanotechnology and agriculture, as well as food, aviation, marine, copper, steel and mining industries, have been listed for public funding.
For interested investors, the shortlisted projects and their details are available on INIF's website, Inif.ir, stressing that the projects would be broadcast on a local TV channel to increase public awareness.
This is a risk-free investment, according to Nazemi, who added that INIF provides investors with a full fiscal state guarantee, which means that if a project does not succeed as expected and does not generate significant value growth, INIF will fully refund the investors.
According to the official, public funding could be as little as 5 million rials ($18).
The plan strategically removes the usual bureaucratic barriers that prevent tech firms from receiving financial aid from the local banking system, which poses a major challenge for emerging tech teams, he added.
The official expressed hope that the new scheme would be well received by the general public.
Nazemi explained that fledgling startups must grow to a certain extent to become eligible for seed money provided by a state agency, but the public funding scheme avoids this limitation and helps them.
INIF is the state arm implementing support policies for knowledge-based entities, providing a variety of assistance to small and well-developed tech companies and startups. The efforts are aimed at increasing their market value and reducing the country's reliance on oil revenues.
Bank Loans
To this end, INIF signed a multilateral deal with four local banks early this month.
Based on the deal, Bank Saderat Iran, Bank Tejarat, Bank Mellat and Bank Ayandeh have agreed to pay loans worth 10 trillion rials ($36.3 million) to startups.
Ali Vahdat, the fund's chief, stated that each applicant company will receive 5 trillion rials ($18.1 million) in lending, depending on their level of development and number of employees, "as newly-founded and smaller businesses will receive bigger payouts”.
The official emphasized the importance of seed money for fledgling tech enterprises, noting that a positive relationship has formed over the past two years between local banks and the fund, which offers more integrated financial aid.
“Over the period, 160 billion rials [$581,800] in loans and grants have been provided to the expanding technology ecosystem. It is hoped that as the number of tech teams grows, so will the amount of aid packages,” he added.
According to Vahdat, the fund directly supports around 8,000 knowledge-based companies and startups.
Mohsen Dehnavi, a parliamentarian, who attended the event, stated that the knowledge-based ecosystem has yet to find its place in Iran's major economy.
“Multidimensional support to technology teams, including financial, legal and technical assistance, should be continued until they can expand their share of GDP and become a sustainable source of revenue for the country,” he said.
INIF Support
According to the local media, INIF also plans to pay 100 trillion rials ($363.6 million) in loans to fledgling technology firms via banking system in the current Iranian year (started March 21).
Vahdat noted that the amount of allocation has been increasing in recent years, rising from 30 trillion rials ($109 million) in 2019-20 to 50 trillion rials ($181.8 million) in 2020-21.
This year’s estimated amount is 100% higher than the cumulative loans paid last year.
In an earlier meeting with Bank Saderat Iran CEO Hojjatollah Seydi, Vahdat presented an overview of the fund’s total capital for the current year.
“The National Development Fund, the sovereign wealth fund, is supposed to transfer $200 million to INIF,” Vahdat said.
“The banking system will also assist the institution by continuing to offer help packages to budding tech firms.”
Vahdat noted that Bank Saderat's share would amount to 3 trillion rials ($11 million).
Seydi stated that his bank is ready to extend its share of the loan and hoped that the seed capital will be of assistance to new entrepreneurs and tech companies.
“The bank plans to reduce the loan application process for Tehran-based applicants to seven days and other cities to 30 days, if the required documents are submitted with their application,” he added.
To relieve the burden on businesses, Seydi noted that the financial aid would be paid without any interest.
