Iran’s capital market plans to develop a new index to track and evaluate the performance of startups and knowledge-based companies, says the CEO of Iran Fara Bourse, the over-the-counter stock market.
Apart from appraising knowledge-based companies, the index will also rate the performance of venture capital managers, Amir Hamouni was quoted as saying by the Iran National Innovation Funds website.
According to Hamouni, the plan is being reviewed by an index committee, made up of indexing and market experts, and will be unveiled soon.
“This was one of the issues of concern for INIF officials,” Hamouni said in a meeting held for financing innovation. The INIF is affiliated to the Vice Presidential Office for Science and Technology.
Underscoring the role of venture capitals in financing the startups and knowledge-based companies, the CEO called for business-friendly regulations to underpin their operations.
Listed venture capital companies will manage the money of investors who seek private equity stakes in startups and SMEs.
Growth Potential Factor
Venture capital is a form of private equity and a type of financing that investors provide to startups and small businesses that are believed to have long-term growth potential.
It generally comes from well-off investors, investment banks and financial institutions. However, it does not always take a monetary form. It can also be provided in the form of technical or managerial expertise.
Venture capital is typically allocated to small companies with exceptional growth potential, or to companies that have grown quickly and appear poised to continue to expand.
The government has developed regulations and procedures to garner support for the small base of startups, which by extension should expand the role of knowledge-based entities in the economy, particularly the stock market.
The capital market is now dominated by petroleum related stocks—including refineries, petrochemical producers and oil industry investment companies.
These companies make up almost half of the capital of the two equity markets, namely the Tehran Stock Market and the junior IFB.
